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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.
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