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3 Hot Stocks You Shouldn’t Trust

Jumping into these names now could be a huge mistake

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Hot Stocks — Office Depot (ODP)

OfficeDepotKudos to Office Depot (ODP) for topping per-share income estimates for Q1. The office supply chain earned an operating profit of seven cents per share of ODP stock, versus estimates of four cents. Throw in the fact that the organization is going to close 400 stores now that the union of Office Depot and Office Max has had time to gel and its weaker units can now safely be culled, and it’s not hard to see why it was one of this week’s hot stocks.

There’s just one problem with expectations for brighter days from Office Depot from here, however — fewer and fewer consumers are stepping foot in office supply stores. And that problem is only going to get worse, for a number of reasons.

Perhaps the biggest reason is that the office space is becoming increasingly digitized. Rather than pens and paper, data and ideas are stores on tablets, laptops, and in the cloud. Office Depot certainly sells computers and tablets too. The trouble is, so do hundreds of other chains and online shopping venues like Amazon (AMZN). Worse, in the rare case where paper or office supplies are needed, Amazon has become the source of choice to meet that need, as well.

Times have changed, and that change largely made the office supply superstore obsolete, even if ODP is one of this week’s hot stocks.

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