• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • TheStreet Smarts
  1. Home
  2. / Investing
  3. / Consumer Discretionary

Go Ahead, Trade Sears

You might be able to make a couple bucks trading this hollowed-out zombie.
By BRIAN SOZZI Oct 05, 2016 | 01:15 PM EDT
Stocks quotes in this article: SHLD, M, BBY, WMT, PBY, AZO, F, SRG

Chronicling the end of Sears (SHLD) will be the story of my career, in all likelihood.

It wasn't too long ago (in 2007, when I crunched numbers as an analyst) that I recall shares of Sears trading well north of $150. At the height of the housing bubble, Sears was looked upon as some sort of real-estate company sitting on endless amounts of oil and natural gas reserves. In other words, Sears' real estate was probably worth north of $300 a share because it was so amazing. Talk about herd mentality.

Further, Sears CEO Eddie Lampert was seen as the next coming of the great Warren Buffett. Somehow the market believed Lampert would spin Sears' vast real estate into gold, give all the money back to shareholders and miraculously save one of the most iconic American retailers in existence. No matter if he never hawked clothes out of a car trunk as a youngin' like Macy's (M) CEO Terry Lundgren, Lampert was a can't-miss wizard.

Now, in hindsight, all of this logic seems akin to how one feels after chugging 10 boots of beer during an Octoberfest gathering -- ridiculously dumb. Shares of Sears have plunged about 94% in the past 10 years.

Today, the market is judging Sears as a dying retailer with crummy real estate (as it should). Lampert only lives through blog posts that are probably heavily edited by his handlers. As for me, I am now a journalist -- one that has probably gotten too fixated on the demise of Sears and subsequently lost sight of the fact you might be able to make a couple bucks trading this turd of a stock long from time to time.

The latest short-term money-making moment is likely now amid the pullback from the session highs on Thursday on news Sears was accepting final bids for tool-maker Craftsman. Pretty crazy that the brand, loosely being valued at $2 billion (though this can't be verified), is worth more than Sears' shares (market cap at $1.3 billion or so) -- a very relevant fun fact pointed out to me by Real Money's Jim Cramer.

Nevertheless, here is what the Craftsman news -- which was probably leaked by Sears -- has created:

1.Removes fear of suppliers cutting shipments during the all-important holiday season. Rumors had begun to pick up that suppliers (I's been hearing toy makers were getting worried) would cut back shipments due to Sears' tepid cash profile. Sears and Kmart are not going to have the cool stuff this season found at Best Buy (BBY) and Walmart (WMT) , but it will now likely have the stuff it needs to post its typical holiday sales decline instead of something more epic.

2. Signals to the market there is an appetite to buy the remaining Sears legacy brands. Suddenly, one envisions a Pep Boys (PBY) or AutoZone (AZO) stepping up to buy the carcass of Sears Auto Center (which would be re-branded). Kenmore to Samsung? Why the heck not? Diehard to some Chinese battery company or Dividend Stock Advisor holding Ford (F) ? Yeah baby!

3. Injects a small amount of confidence that Lampert still knows how to get crafty in order to save his investment in Sears (and Sears landlord Seritage (SRG) ). Is Lampert a retail CEO? No way, but he could probably extract more blood from a rock than one. And for the market, that may be OK right now.

Make no mistake, I firmly believe Sears will be out of business before the year 2020. The company is a hollowed-out zombie, with so many operational holes up and down the organization and no clear path to compete in a super-dynamic retail market. But in the near term, the market may choose to play Sears from the long side on the belief the company finishes off several big cash-raising efforts by the first half of 2017.

Good luck playing this one.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Employees of TheStreet are restricted from trading individual securities.

TAGS: Investing | U.S. Equity | Consumer Discretionary

More from Consumer Discretionary

It's Hard to Say What's Cookin' at Weber, Though It Smells Like a Short Squeeze

Jonathan Heller
Aug 17, 2022 11:30 AM EDT

The grillmaker's stock has traded wildly and heavily at times, most recently this week after it posted its latest results on Monday.

A Cannabis ETF and a Micro-Cap Stock That Have Grabbed My Attention

Bob Byrne
Aug 15, 2022 8:30 AM EDT

The ETF is showing signs of perking up and the micro-cap is a maker of electric outboard motors.

Fossil Group Sounds the Alarm While NL Industries Rewards Its Shareholders

Jonathan Heller
Aug 12, 2022 10:30 AM EDT

The former signaled lower revenues for the year while the latter declared a healthy special dividend.

Disney Is Firming Up a Bit Ahead of Earnings

Bruce Kamich
Aug 8, 2022 8:36 AM EDT

The charts of the entertainment giant are modestly positive before it reports fiscal third-quarter results after Wednesday's close.

Put e.l.f. on the Shelf as the Stock Surges to a 52-Week High

Bruce Kamich
Aug 4, 2022 2:31 PM EDT

Here's why investors should consider taking profits now.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 02:23 PM EDT STEPHEN GUILFOYLE

    We're Cleaning Out This Retailer From the Bullpen

    Check out the latest moves in TheStreet's Stocks U...
  • 10:24 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    To Improve Your Trading and Investing, Spend More ...
  • 08:44 AM EDT PETER TCHIR

    CPI Beats Expectations, But Maybe Not the 'Whisper'?

    Slightly better-than-expected inflation across the...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login