Crista Huff

My daughter needed blank legal-sized paper for her homework, and I didn't have time to ponder, "Who do I know who works at an office building that can bring me a few sheets of paper?"  So I went to OfficeMax, dreading spending $8.99 on a ream of paper that I'll never use again after the first two sheets.

I know there are some people in America who still have free cash flow, but most taxpayers have less income and assets than they did a decade ago, yet their expenses have increased due to inflation.  I don't want to spend a dime that I'm not required to spend, and you probably don't want to either.

Reluctantly, I walked into OfficeMax, and then the lightbulb went on.  I walked over to the copy machine area, and asked them if I could pay for two sheets of paper, as if I had made photocopies.  The young man handed me five sheets of paper, for free, and sent me on my way.  Ka-ching!  That's how you win customers.

Let's look at OfficeMax's viability as a stock investment, and throw in other office product providers for comparison.  My criteria always include a minimum stock price of $20, growing sales and earnings, and a good stock chart.  Here's what I found:

OfficeMax (OMX, $4.98) -- With a share price of $4.98, and a recent string of net losses, I will look no further. I don't buy low-priced stocks. Period.  But I'm quite happy to shop there!

Office Depot (ODP, $2.16) -- Another low-priced stock with an even longer string of net losses.  How does a company which consistently loses this much money stay in business?

Are these two companies taking business advice from the green energy industry?  Maybe they should try capitalism.  I hear capitalists strive for profit and employ people.

Good Lord, are there any profitable companies in this industry?

Staples Inc. (SPLS, $14.87) -- Low share price, stagnant revenues, growing earnings per share.  Financially healthy, but not good enough for investing. Incorporated (STMP, $25.90) -- This one's a tiny little company with about $80 million in sales in recent years and only $5 million in profits.  It's not that the company isn't doing well. It's just that the company's so tiny that if the Obama administration decided to turn its regulation-happy pitbulls in the directionn of the office products industry, a company this small won't be able to afford to pay the price.  I realize that's a cynical way to look at business in America, but it's also reality.  My approach to stock investing always includes ways to minimize risk, and one of the ways I do that is by investing in  larger companies which are more likely to weather storms.

United Stationers Inc. (USTR, $31.29) -- Annual sales have been flat at just under $5 billion per year for the last three years. Net income has been growing, and earnings per share (EPS) are projected to grow 50% by FY2013. The dividend yield is 1.66%, and the stock price chart is decent.

Going back ten years, USTR stock falls during bad markets, recovers well, and then climbs in price. The price peaked around $34 in 2007, fell with the 2008 Financial Meltdown and fully recovered. USTR stock spent six months trading between $32.50 and $37  this year before falling with the market in August.

What happens next depends a lot on the stock market as a whole. A near-term price range of $29 - 31 with a subsequent move upwards looks likely, given a stock market which continues to stabilize or improves. Down markets are a tabula rasa for savvy investors seeking to buy low. Fiscally healthy companies like United Stationers warrant a closer look.

Crista Huff

Crista Huff is a retired stockbroker from a NYSE member investment firm. She writes about market-timing at Goodfellow LLC and is active politically.
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