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Office Depot: Value Play or Value Trap?

Shares of Office Depot (NASDAQ: ODP  ) are up 8% since activist investment fund Starboard Value LP bought a 13% stake on Monday morning. Starboard CEO Jeffrey Smith believes that shares are "deeply undervalued."

Despite the appearance of a new activist investor, don't expect Office Depot's stock bump to last. Activist investors almost always mean a short-term win for a stock, but long-term success is harder to come by.

Office Depot is behind the curve in many ways, most significantly in terms of online presence. Competition from (NASDAQ: AMZN  ) and even (NYSE: WMT  ) is a killer for brick-and-mortars that are slow to adapt. Office Depot may be undervalued, but in this case, it's for good reason.

To learn about two retailers with prospects that couldn't be further from those of Office Depot, we invite you to take a look at The Motley Fool's special free report on The Real Cash Kings Changing the Face of Retail. In it, you'll see how these two companies are able to consistently outperform, and how they're planning to ride the waves of retail's changing tide. Click here now to access the report.

Chris Hill, Jason Moser, and Joe Magyer own shares of The Motley Fool owns shares of and Staples. Motley Fool newsletter services recommend and Staples. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.

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  • Report this Comment On September 18, 2012, at 11:18 PM, autoinsider wrote:

    Walmart and online retailers are eating these old computer brick & mortar stores' lunches.

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Related Tickers

10/25/2016 10:03 AM
AMZN $836.90 Down -1.19 -0.14% CAPS Rating: ****
ODP $3.25 Up +0.01 +0.15%
Office Depot CAPS Rating: **
SPLS $7.57 Up +0.03 +0.40%
Staples CAPS Rating: **
WMT $69.73 Up +0.54 +0.78%
Wal-Mart Stores CAPS Rating: ***