Stocks That Won’t Exist in a Decade: Sears (SHLD)
The Way Out: Bankruptcy
Sears Holding Corp (NASDAQ:SHLD) stock has better than doubled just since February, in large part due to an epic short squeeze aided by insider buying. But from here, the recent gains look more like a “dead cat bounce” than any real change in the prospects for Sears.
Of course, even the bull case for SHLD stock rests in large part on the real estate underpinning the business – not the business itself. Sears itself added “going concern” language to its most recent 10-K filing after an abysmal year. But SHLD bulls insist that real estate and assets like the Kenmore brands and royalties on Craftman sales by Stanley Black & Decker Inc. (NYSE:SWK) are worth more than the debt — even if both Sears and Kmart cease to operate as traditional retailers.
I’m skeptical of that case, and I still believe SHLD stock is headed to zero. But even if Sears survives, it won’t be as a retailer.