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The Motley Fool Loves...RadioShack?



August 25, 2013 – Comments (3) | RELATED TICKERS: JCP , RSHCQ

This post is more of a question rather than an opinion I currently hold.

The Motley Fool is known for being a company interested in holding strong companies for the long term.  They have reaped huge rewards from owning stocks such as Lumber Liquidators, Netflix, Amazon, Google, and Apple - companies with storied histories and jaw-dropping returns over the past decade.

So, whenever I read a Motley Fool article about RadioShack (NYSE:RSH), the struggling chain of electronics stores, I am rather befuzzled when I read in the disclosure section "The Motley Fool owns shares of RadioShack."

My question is...WHY?  What does Motley apparently see that I don't see?  Most indicators seem to point to RadioShack continuing to decline and fade away into oblivion (see hyperlinked article).  The only reason I can think of is that Motley thinks RadioShack has been around for 90+ years and will eventually find its place with new management and an upcoming flood of new electronic gizmos rushing into the market.  But, with declining revenues, RadioShack's burning through cash at an alarming rate, and an 85% share price decline since the beginning of 2010 (see chart), I don't see why Motley is choosing RadioShack as a potential turnaround play.  Parllels can be drawn between RadioShack's debacle and the J.C. Penney (NYSE:JCP) saga - two "old dog" companies struggling to adapt to the modern world.  Motley in general seems to be very bearish on J.C. Penney.

If anybody has perspective on this for me, that would be greatly appreciated :)

3 Comments – Post Your Own

#1) On August 25, 2013 at 5:11 PM, EvanBuck (99.92) wrote:

Whoops, another thing I forgot to mention is that Motley might be doing this as a pure value play - RadioShack shares should currently be at around $5 according to analysts.  But I'm still not sure...

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#2) On August 25, 2013 at 8:37 PM, constructive (99.97) wrote:

Maybe value traps like RSH are the reason why Hidden Gems has trailed the market by 66% since inception. (58% versus 124%)

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#3) On August 25, 2013 at 8:37 PM, constructive (99.97) wrote:

I share your opinion that it's a bad business, probably in terminal decline.

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