(B)(N) The U.S. Retail Value Trap

Courtesy: Bon-Ton Stores Incorporated

Drama. There are no “bargains” in the stock market and shopping in the basement for the end-of-the-line and bespoke brands has cost investors ($7.7 billion) last year for an aggregate return of minus (-52%) and another ($8.6 billion) and minus (-38%) so far this year as they hang-on or maybe “double-down” for a better outcome.

The current market price for all five of the stores – and a lot of employees, customers, debt, inventory and real estate – is $14 billion and that’s only 1/2 of the price of risk ($28 billion). We’ve included Best Buy Company Incorporated but the jury is still out on that (Business Wire, January 17, 2014, Investor Alert: Best Buy Co., Inc. Investigation Announced by Holzer & Holzer, LLC). Please see Exhibit 1 below for the scary fundamentals.

Exhibit 1: The U.S. Retail Value Trap – Fundamentals – February 2014

The U.S. Retail Value Trap – Fundamentals – February 2014

The “Overvalued” U.S. Retail Value Trap – February 2014

These stores could be called a “value trap” for small investors but they are a “liquidity trap” for large investors and it is they – entrepreneurs, institutions and hedge funds – who will determine the buying and selling price for these stores.

The solution is to buy them all, job the inventory to Amazon and the Dollar Stores, and deal with the debt, pension plans, severance, and all the real estate.

Exhibit 2: (B)(N) The U.S. Retail Value Trap – Prices & Portfolio – February 2014

The U.S. Retail Value Trap – Prices & Portfolio – February 2014

For more information on the chart elements and additional references to the theory, please see our Post, The RiskWerk Company Glossary.

And for more on what risk averse investing has done for us this year, please see our recent Posts on The S&P TSX “Hangdog” Market or The Wall Street Put or specialty markets such as The Dow Transports & Utilities or (B)(N) The Woods Are Burning, or for the real class action, La Dolce Vita – Let’s Do Prada! and It’s For You, Dear on the smartphone business.

And for more stocks at high prices, The World’s Most Talked About Stocks or Earnings Don’t Matter – NASDAQ 100. And for more on what’s Working in America, Big Oil, Shopping in America or Banking in America, to name just a few.

Postscript

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