Staples ($SPLS) – Stock Pick for 1-23-14

Lately, Staples has gone on a bit of a slide this month. As of yesterday’s close, it was sitting at $13.83. I see this as a great buying opportunity here though.

Recently the company has relaunched their brand and made changes to how they do business online that has made them the #2 online retail spot just behind Amazon. During the past year they have increased their inventory from 75,000 products to over 400,000 products. With a larger range of options, more customers are coming to them to help supply their needs.

Their P/E ratio is much better than the specialty retail industry coming in at 18.80, compared with the industry at 47.98. They have a low P/S ratio as well at .37 compared to the industry at 2.37. That suggests a good bit of value to be had.

In the past year the stock has been as high as $17.30. I think they will start heading back that direction again as they continue to see strength from their online business. They also pay out a dividend that currently yields 3.5% which gives a little extra incentive on top of things here. If they re-test the previous year’s high, I see at least a 20% upside. So that’s why they are my latest stock pick.

*Disclosure: I purchased shares of Staples today in my IRA portfolio.

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