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Why the Shorts Are Wrong About SUPERVALU

The following video is part of our "Motley Fool Conversations" series, in which consumer goods editor/analyst Austin Smith discusses topics across the investing world.

In today's edition, Austin talks about why the shorts are wrong about SUPERVALU, and why this stock is a super value today. The company is quickly shedding the baggage from their Albertson's acquisition, which has been a ball and chain on their balance sheet for a while now. As they pay down debt and write down bad assets, their metrics are sure to rebound in a big way. Not only that, the company trades at a bigger discount to free cash flow than their competitors.

If after hearing this, SUPERVALU's debt load is still too much for you, then maybe you should take a look at our free report: "The Motley Fool's Top Stock for 2012." In our special free report we highlight a great emerging-market stock that doesn't have the same burdens SUPERVALU is trying to shed. Instead, this company is all upside from here. Click here to download your free report now.

Austin Smith has no positions in the stocks mentioned above. The Motley Fool owns shares of SUPERVALU and Whole Foods Market. Motley Fool newsletter services recommend Whole Foods Market. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (4) | Recommend This Article (9)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 23, 2012, at 4:56 PM, PagoJeff wrote:

    What more could you say??? I'm LONG SVU!

  • Report this Comment On February 24, 2012, at 2:03 PM, TMFBWItime wrote:

    That makes two of us, great choice!

  • Report this Comment On February 25, 2012, at 9:15 AM, harrisob22 wrote:

    Great analysis, thank you. But I do have a hard time believing the shorts are universally confused about goodwill vs. real revenue losses at Supervalu. The chart you are missing is the revenue chart, steadily decreasing since 2008 because of negative same store sales. The shorts, in my opinion, won't cover until SSS flatten out. That could take years still -- my analysis shows it happening by the end of FY 2014.

  • Report this Comment On February 27, 2012, at 7:47 AM, TMFBWItime wrote:


    The gradual decline in revenue and SSS certainly has me worried as well, but I have tremendous faith in Craig Herkert to turn that ship around. His experience with Wal-Mart is exactly the sort of operational excellence investors should be happy to have at the helm.

    This is one we'll have to wait and see how it plays out. I admit it could fall either way, but i've put my chips on SUPERVALU's diligence paying down debt to reward the long term investor.

    Fool on!

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