Stocks to Sell #2: Office Depot (ODP)
Click to Enlarge Office Depot (ODP) recently completed its acquisition of smaller rival OfficeMax, consolidating a troubled office supply sector that’s being pinched by cheaper alternatives and a lack of a clear reason for existence when paper, pens and toner can be found just about anywhere nowadays.
Like Best Buy, ODP stock has been on a tear as investors — hopeful that consolidation in the industry would boost profitability — bid shares up from a low of $1.51 in late 2012 to a high of $5.85 in October.
But after consolidating for the past four months, Office Depot shares have broken out of a pennant pattern, setting the stage for a return to the September lows — a 13% decline from here.
I’ve also added ODP short to my Edge Letter Sample Portfolio.