Why SUPERVALU Shares Popped

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

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 struggling supermarket chain SUPERVALU (NYSE: SVU  ) jumped as much 22% today on reports that it was close to a deal with investment group Cerberus.

So what: According to The Wall Street Journal, Cerberus would take some parts of the business private and purchase a stake in others, leaving the stock intact. All told, Cerberus is expected to contribute $500 million. SUPERVALU, which has been bleeding cash for the last few quarters, faces a host of problems including a crushing debt burden, fruitless restructuring costs, and increasing competition from the likes of Wal-Mart and Target. Shares are now worth just 10% of their price before the financial crisis, which prompted management to go hunting for a buyer.

Now what: At this point, pretty much any news is good news for SUPERVALU, as it seems like things can't get any worse. Based on some metrics, the stock is unbelievably cheap, trading at a P/S of just $0.02, and the variety of chains it owns, including Jewel-Osco, Albertsons, and Shoppers Food Warehouse, would seem to indicate that there's value to be found somewhere. Cerberus has expressed particular interest in Albertsons, as it already owns a different set of Albertsons stores. Expect an update when SUPERVALU reports earnings next Thursday.

Don't miss the next update on SUPERVALU:

Don't miss out on the chance to get the inside scoop on what Motley Fool superinvestor David Gardner will be buying this year. He's crushed the market in his Stock Advisor and Rule Breakers portfolios for years, and now you can take a personal tour of his flagship stock picking service: SupernovaJust click here now for instant access. 

Read/Post Comments (1) | Recommend This Article (7)

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 January 04, 2013, at 5:39 PM, OklaBoston wrote:

    Takeover speculation looks to me like the only reason to be at all interested in this stock. That's not my game, so I'll pass on opening any pickat all on it.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2179978, ~/Articles/ArticleHandler.aspx, 9/25/2016 12:09:46 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,261.45 -131.01 -0.71%
S&P 500 2,164.69 -12.49 -0.57%
NASD 5,305.75 -33.78 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/23/2016 4:04 PM
SVU $4.68 Up +0.01 +0.21%
SuperValu CAPS Rating: **