RadioShack Shares Popped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of embattled electronics retailer RadioShack (NYSE: RSH  ) surged more than 20% Tuesday after it announced a deal to bring Verizon Communications (NYSE: VZ  ) phone offerings to its stores.

So what: RadioShack also said it will end sales of T-Mobile products, essentially swapping a small and weak partner for a big and strong one. "We are working diligently to position RadioShack for future growth in the wireless space and our new relationship with Verizon Wireless, the nation's largest wireless provider, is an integral piece of that program," RadioShack CEO Jim Gooch said.

Now what: I'd continue to be cautious about the stock. While the Verizon deal is certainly a big win for RadioShack, the company also announced a second-quarter profit drop of 53% as fierce competition from the likes of Amazon.com (Nasdaq: AMZN  ) and Best Buy (NYSE: BBY  ) continued to pressure margins. I still can't get comfortable about RadioShack's overall position in the space, but given its new partnership and single-digit forward P/E, I can't blame bargain hunters for looking into it, either.

Interested in more info on RadioShack? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of Amazon and Best Buy. The Fool owns shares of Best Buy.Try any of our Foolish newsletter services free for 30 days.

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  • Report this Comment On July 26, 2011, at 1:24 PM, artievandelay wrote:

    So because now they offer Verizon phones people will start shopping at Radio Shack? That's a riot. Do you think people even knew that they didn't offer VZ phones? No. Will them having VZ phones bring in crowds? No.

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