Why Office Depot Is Poised to Keep Poppin'

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Office Depot (NYSE: ODP  ) rallied 4% today after Bank of America upgraded the office supply retailer from "underperform" to "buy."

So what: Along with the upgrade, analyst Denise Chai raised her price target to $6.50 (from $3.50), representing about 20% worth of upside to yesterday's close. While momentum traders might be turned off by Office Depot's recent share-price weakness, Chai believes that it presents investors with a solid entry point given the potential synergies from its recent merger with OfficeMax.

Now what: Bank of America expects the combined entity to post a $0.02-per-share loss in 2013, a $0.32 profit in 2014, and earnings of $0.54 in 2015. "With the merger with OfficeMax completed on Nov. 5 and the stock down 10% since 11/1, we are turning positive on the potential for cost synergies, particularly with the announcement of a new outside CEO with substantial turnaround experience," noted Bank of America. But while Office Depot might be set up for a nice short-term pop, increasingly strong competitive headwinds continue to make it a questionable long-term opportunity.

A more reliable way to wealth
Dividend stocks can make you rich. It's as simple as that. While they don't garner the notoriety of high-flying growth stocks, they're also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.


Read/Post Comments (0) | Recommend This Article (1)

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.

Be the first one to comment on this article.

DocumentId: 2727096, ~/Articles/ArticleHandler.aspx, 7/23/2014 12:59:14 PM

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...


Advertisement