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RadioShack Corp. Message Board

  • bucktt bucktt Mar 20, 1998 12:30 AM Flag

    Stopped out

    I got stopped out of my position this morning.
    Some food for thought.

    Postmortem:

    Shorting TAN at 44 3/4, stop at 47. Short is mostly
    on a technical basis. TAN has had a quick runup to
    the 45-46 area followed by an equally violent decline
    to the low 30's which was followed by another fast
    runup to around 45 forming a double top formation.
    In most cases, stocks aren't able to push past the
    resistance level and it bounces down to a support level.
    This is specially true for stocks that ascend very
    quickly, as in the case of TAN. Previous 52 week high
    was 46 3/8. Resistance levels are between 45 1/2-46 1/2.
    Target at around 38 providing a risk reward ratio of 1:2.

    On the fundamental side:

    1. TAN faces intense competition from electronics discount
    retailers like BBY, CC, and CPU and mail order firms like NSIT,
    CDWC, DELL, GTW, etc. In all cases, competitors (which are higher
    ranked) deliver better prices than TAN. TAN is the parent
    company for Radio Shack and Computer City stores.

    2. TAN is ranked 15 out of 20 in their industry (retail/
    wholesale components).

    3. Pricing pressures on PC's are incredible, price wars
    caused by competition are intensifying and are affecting
    margins on PC sales.

    4. Growth. It is difficult to imagine where revenue growth
    will come from. Possible areas: 1. expand product line, not
    likely since store space is limited (except possibly for
    satellite dishes and cell phones); 2. additional services,
    warranty, installation services, etc; 3. additional stores;
    4. reorg, increased efficiencies.

    5. Slowdown in demand for PC's. Warning bells already ringing
    at INTC and CPQ.

    Recent News:

    1. RadioS increase of 12% same store sales in Feb vs last year,
    Computer City decrease of 1% over Feb last year.
    2. CPU (competitor) earning warnings.
    3. INTC earning warnings. CPQ earning warning, inventory levels.

    Fundamental data:

    Zcks analyst rec: HOLD

    98 EPS (consensus est) 2.20
    97 EPS (est) 1.82

    1Q98 EPS (consensus est) 0.34
    1Q97 EPS 0.30

    4Q97 EPS 0.88 (vs consensus of 0.89)

    EPS growth rate vs industry:

    97/98: -9.6
    96/97: 4.3
    next 5 yrs:-6.6

    In hindsight:

    Stock's upward bias could be because of rotation into
    retail sector. It could also be because of momentum
    of similar stocks like BBY and CPU (even got an upgrade
    after warnings) pulling up stocks in similar categories.

    On 3/18, the stock made a good move upwards on good volume.
    On 3/19, it crosses 47 and hits my stop.

    Obviously, the spinoff will affect the EPS numbers. Question
    for TAN fans:
    1. To what extent?
    2. Who will be considered TAN's competitors after the spinoff?

    It is possible that the breakout has attracted momentum
    investors. If it has, beware, you don't want to be holding
    the hot potato when the music stops.

    What's next:

    I will keep this on my watchlist and look for another
    suitable entry point.

    As always, correct me if I'm wrong. Later.


    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • As a resident of Texas I think it important to say that very few are interested in leaving the WONDERFUL USA. We are a part of this great country and plan on staying that way. We would like to see the liberals leave though.

      Texas is not as big an oil producer as it is a technology state. You see We have Texas Instruments, Dell Computer, and Compaq, not to mention Tandy one of the greatest electonic retialors of them all. And great profits are in store now that Jack finally has decided to leave. We also produce the best leather goods in the world.

      We are one of the great states that did not vote Clinton in to office and have a large group of American citizens that support the RED, WHITE, & BLUE.

      So please do not take us as a group because we have a few nut cases they are in your state as well.

    • The Lone Star flies high and remains above the Stars and Stripes. I love the USA, as most Texans do. You would have to be lucky enough to be from Texas or educated enough in Texas history to understand.
      Again, we joined the Union by choice, but would have the 5th largest economy in the world if we separated.
      You are the one who asked about the flag. You made the rediculous suggestion of export duty- that we don't even charge Canada or Mexico since NAFTA. They still fly their sovereign
      banners. Quit your whining about my country and contribute something prductive!

      God bless America!

    • I can get gas from Canada, OK, CA, WY, OH, PA, TN, WVA, NB, UT,
      ND, the Gulf of Mexico, Mexico has 3 times the crude of Texas,
      Venezuela, Brazil, Argentina, ooops Alaska.....Let's not mention
      the rest of the world, Kuwait, Saudis, Indonesians, Iran, Iraq,
      cheez, I forgot so many that I appologize.

      Keep your crude, there is not much left down there in the big T,
      but a lot of hot air. You want to be a true American? Then respect the Stars and Stripes....the bill of rights, and the Constitution. Go ahead you want to leave, be my guest...you will beg to come back.... You will end up paying $3.50 per gallon,
      not the rest of the 49'rs.... I see biggotry has not faded in the
      in the big T, let alone common sense...The stories are true. Thanks.

    • Texas is the only state that was an independent republic proir to choosing to join the Union. It also is the only state which could legally separate from the Union.

      I think an export duty would be a tremendous idea. Are the rest of you ready to pay $3.50/ gal. for gasoline?

    • BBY earned $1.29 for the 4th Q. Fiscal just ended $2.07.

      Estimate for current year super rich...Don't let rhetoric cloud
      your judgement. Those Texans down there will dangle a carrot and
      if you bite it, you get hooked. On your residuals, I can go to my local grocery store and get a cell phone, etc., There is a glut going on in this sector. Tan depends on high margins, the variable costs and fixed are high. The consumer has been spoiled,
      look at the product mfr. in the computer area, down. It trickles
      down, just a cycle ....and an early spring this year, especially
      in the part of the country where it counts. On another note why
      does Texas fly the U.S. flag lower than their own State flag?
      It's the only state in the union....btw. Maybe the rest of the 49
      should charge an export duty! (G)

    • Bulit in repeat business! RadioShack is so different from every other electronics retailer. When sell a TV , VCR or computer when will you see more dollars or profit from the same customer???? It's not an exact science, you never really know?? But when you sell a cellular phone or digital phone and..... get a piece of every dollar the customer pays the carrier..... you do have some idea.
      I think the residuals from services will continue to grow and surprise everyone.

      By the way BBY had one month with a sales gain last year.. Tan had 9 months over 5% and and only one negative month. Tan reported a +14% in Jan. & a + 10% in Feb. We'll have to wait and see for March.

      if don't like like the company.... just don't buy it..... and find yourself a message board you like better.

    • Climbing? The support is coming from the inside IMHO. A share repurchase plan, but paying dear prices. Why? Tan has to "rid" itself of the Computer City sub....it would be a severe drag as
      CPU has revealed the current, future expectations in this part of the industry. That was very nice of CPU....and I think dilligent on their part. How much is Computer City worth now...???

      On another note, the fellow that is the CEO of Tans Computer City
      sub, came from none other than CPU itself, former COB/CEO....of
      CompUSA, CPU. Take it for what it's worth...and good luck, the
      overall market is fooling many. On another note some important
      companies are laying people off already in things that are
      neccesities, (sp?)...Why? It's the El Ninjo effect....what?

    • BBY was up $5.875 for the week, close to close.

      Tan was up $0.75 for the week, close to close.

      BBY was up almost 10%, vs Tan 1.6% for the week....CPU plunged,
      and incidentally if you pull up TAN quote here, you will see
      the CPU recent press release on the biz. of computers....that
      is an implication IMO, that CPU's biz does relate to Tans biz.
      The news just takes time to filter down, reality settling in.
      Tan has that sub. they sell the same stuff CPU does, btw.
      It's just a matter of time, the Dow is intoxicated, and by April
      15 the Ira $$$ stop flowing in...mark that on the calendar it should be an important date...

    • Appreciate your comments! Any idea why TAN keeps climbing?

    • BBY is a growth stock, Tan once was...past tense.
      As well, BBY has a higher Book Value, higher sales and the recent
      Q, BBY earned as much as Tan did all year....??? Get it? No?
      BBY has less than 1/2 the outsanding shares of BBY. About
      43 million vs. Tans 103+ million outstanding....Get it got it!
      There is more, I haven't the time to waste, you dig for it...lots
      more. You are in an overvalued market in these big caps...think!

      I think you are confusing yourself IMO, but that's o.k., I sense
      it in your post. Sorry for being so forward, but when you "demand", I speak my opinion...it's the U.S.A. afterall, do I
      need to explain the Bill of Rights next? Have a nice day, of course.

    • View More Messages
 
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