Good News for Sears
Is the stock finally turning around?
By Ann Coleman (TMF AnnC)
RESTON, VA (Dec. 2, 1999) -- All of a sudden, Sears is looking good. Several
analysts have upgraded their ratings on Sears, and a whole passel of positive stories have
hit the wires.
Sears gets brownie points for selling energy-efficient appliances.
Sears starts Christmas shopping season off with a strong Thanksgiving weekend.
And the biggie -- Sears expands its website with online gift cards, online credit
applications, instant processing, and my favorite: Tool Territory. It sounds like Sears is
playing to its strengths. (See below for some other interesting links.)
Meanwhile, the stock has bounced back at least part of the way from that dread moment
when it was kicked off the Dow. It dropped as low as $27 after the Dow announcement,
but closed today at $34.50 -- up 28% in six weeks. It still has a long way to go before it
gets back to the price range of $40 to $50 where many Foolish Four investors bought it
last spring, but at least it's going in the right direction, at the moment anyway. More
important than the stock price may be the more positive attitude I seem to detect about
the company's future.
If I may be permitted a small sermon -- O, Ye of little faith! Six weeks ago Sears was the
dog that would never bark again.
The whole point of the Foolish Four strategy is to find the companies that people think
are on death's door. Because we deal only with blue-chip stocks, the chances are good
that most of the weeping and wailing is over-reaction. Sure, these companies are having a
hard time, but in most cases the problem is temporary (as in, it goes away in a year or
two, but usually not in a month or two).
The discipline of the Foolish Four strategy helps us pick those stocks when no one else
wants them. Naturally, they are not going to turn around the day we buy them, and some
will never turn around. But you buy them, you wait a year or two, sometimes three, and
at some point management wakes up, or the economy changes, or the rest of the
investing world discovers that undervalued gem, and your patience is rewarded.
The problem with Sears isn't that it didn't turn around soon enough, but that it continued
to drop after a lot of folks in this community bought it. When they made their actual
purchase will ultimately affect how this stock does for them.
That's one of those unfortunate truths, and the basic underlying reason why investing in
stocks pays better in the long run than investing in sure things.
By the way, now that I have called Sears a "turnaround," you can expect it to start
another decline beginning right... about... now. But I'm not worried. I'm heading over to
Tool Territory!
One final note: Interested in being on The Motley Fool Radio Show this week? Drop an
e-mail to Macg@fool.com with a question or comment on investing and a daytime phone
number.
Fool on and prosper!
Related Links:
Research Alert -- Sears Upgraded to Buy
Banc of America Upgrades Sears to Buy
Sears Estimates Raised |
