Over the past four weeks, both Staples and Office Max have seen their target prices drop. At Staples, the median target price fell from $19.00 to $18.00. The share price today is $14.40, indicating a potential upside of 25%. At Office Max, the median price target fell from $7.50 to $6.75, indicating a potential upside of 42.1%. At its current earnings multiple of about 8, Office Max could be a contender, but the company is closing stores and only expects revenue to be flat with last fiscal year. The company’s price/book ratio is also a very low 0.62, but again, that could be deceptive.

Staples’ median target price has fallen further below its 52-week high in the past month and its price/book ratio is pretty high at 1.40. The company reported weak sales and earnings, and like all the office supply stores, traffic is down. The trend is particularly bad in Europe. Staples may hit its revenue and profit targets for the quarter and the year, but that’s only because the estimates have come down.

Barnes & Noble missed revenue and profit estimates yesterday, but the stock continues to rise because sales of the company’s Nook e-readers and tablets have risen sharply (85%, to $200 million) and investors believe the trade-off for book sales is a positive sign. B&N’s median target price rose from $15.50 to $20.00 over the past four weeks, and at today’s price of $16.15, the potential upside is 23.8%. Nook sales account for just over 10% of the company’s total revenue, so unless sales continue to climb at last quarter’s rate, B&N’s chances of fulfilling its promise are pretty slim. The company’s forward P/E is 37.42 and the price/book ratio is 1.09, which could lead one to believe that the stock may be approaching an overbought status. The company’s share price has risen by about 25% in the past 12 months.

Sotheby’s median price target fell from $51.00 to $45.00, and at a current price of $32.14, the stock’s potential upside is 40%. That figure would be cause for more joy if Sotheby’s share price hadn’t fallen by -7% in the past month and if the target price were still about the 52-week high. Sotheby’s forward P/E is 10.79, but its price/book ratio is 2.47. For the fiscal year ending this month, Sotheby’s EPS estimate has fallen by -$0.23 in the past 90 days. This does not look like a company about to bust its target price.

PetsMart has a median target price of $53.50, a rise of $3.50 over the past four weeks. At today’s share price of $48.95, the potential upside for the stock is 9.3%. The company beat third-quarter earnings and revenue expectations and boosted its fourth-quarter EPS estimate to $0.85-$0.89. Shares put up a new 52-week high of $49.03 today. The company’s forward P/E is 16.36, and its price/book ratio is a fairly high 4.66. But sales and profits have been growing, and the stock price is up about 25% this year.

Share price gains have fallen about equally on B&N and PetsMart in the past year. The other stocks we’ve looked at have lost between -25% and -75%, with Office Max the biggest loser. B&N also boasts a 5.7% dividend yield, compared with just 1.2% for PetsMart.

PetsMart’s 9.3% potential upside is within reach as long as the store sticks to its business, while B&N’s potential gain of nearly 24% depends on selling boatloads of its Nook devices, which is possible and  perhaps even likely. But as that happens B&N cannibalizes its old business and that may be hard to make up quickly.

Paul Ausick

The companies we’re looking at include Office Depot, Inc. (NYSE: ODP), Office Max Inc. (NYSE: OMX), Staples, Inc. (NASDAQ: SPLS), Barnes & Noble, Inc. (NYSE: BKS), Coinstar, Inc. (NASDAQ: CSTR), Sotheby’s (NYSE: BID), Tractor Supply Co. (NASDAQ: TSCO), Titan Machinery Inc. (NASDAQ: TITN), PetSmart Inc. (NASDAQ: PETM), and Luxottica Group S.p.A. (NYSE: LUX).

Diversity aside, most of these stocks have very high implied gains, which means either that they are worth a second look or that there is no hope that any will ever hit their targets and that a lower target is soon to come. Which result will occur depends to a large extent on competitors in the same business, the overall economy, and whether consumers regain some of their lost confidence.

All data from Yahoo! Finance, with current prices taken at about noon today.

Office Depot, Inc. (NYSE: ODP) has a median target price of $4.00 from 13 brokers. Shares are trading today at $2.30, for an implied gain of $1.70, or 74%. Office Depot’s forward P/E is 28.5 and the company does not pay a dividend. The stock’s 52-week trading range is $1.75-$6.25, and at today’s price that’s about 31% above its 52-week low, posted earlier this morning, and 63% below the 52-week high.

Analysts didn’t expect much from Office Depot in the third quarter, and the company failed to deliver even that. EPS was break-even compared with an expected EPS of $0.01. Revenue also missed estimates. The implied gain in this stock is purely illusory when you consider its earnings and its immodest forward P/E.

Office Max Inc. (NYSE: OMX) has a median target price of $7.50 from 14 brokers. Shares are trading today at $5.10, for an implied gain of $2.40, or 47%. Office Max’s forward P/E is 7.39 and the company does not pay a dividend. The stock’s 52-week trading range is $3.90-$19.20, and at today’s price that’s about 31% above its 52-week low, posted earlier this morning, and 73% below the 52-week high.

Office Max reported that net income rose last quarter but revenue fell, as a result of cost-cutting measures. The company expects full-year revenue to be flat with last year. The company also plans to continue closing stores. There’s little long-term happiness in store for the company.

Staples, Inc. (NASDAQ: SPLS) has a median target price of $19.00 from 16 brokers. Shares are trading today at $14.69, for an implied gain of $4.31, or 29%. Staples’ forward P/E is 9.58 and the company pays a 2.8% dividend yield. The stock’s 52-week trading range is $11.94-$23.75, and at today’s price that’s about 23% above its 52-week low, posted earlier this morning, and 38% below the 52-week high.

Staples has been rumored as a possible buyer of either Office Depot or Office Max or both. The company’s market cap of $10.5 billion is about 10X the market cap of the other two combined, so such a deal is not out of the question. Staples’ target price is now lower than its 52-week high, a sign that analysts don’t expect a lot of growth. That could either spur the company to go ahead with an acquisition or cause it to sit on its hands.

Barnes & Noble, Inc. (NYSE: BKS) has a median target price of $15.50 from 4 brokers. Shares are trading today at $11.52, for an implied gain of $3.98, or 35%. B&N’s forward P/E is 33.87 and the company pays a huge 8.1% dividend yield. The stock’s 52-week trading range is $10.30-$12.65, and at today’s price that’s about 12% above its 52-week low, posted earlier this morning, and 9% below the 52-week high.

B&N is trying to keep up with Apple Inc. (NASDAQ: AAPL) and Amazon.com (NASDAQ: AMZN) in the e-reader/tablet market. The company is set to announce a new entrant in its Nook device family on Monday. Somehow, taking on the two biggest players in the market with a device that costs more than a comparable device from Amazon and has far less capability than an Apple iPad just doesn’t seem like a long-term winning strategy.

Charles River Laboratories International, Inc. (NYSE: CRL) Started as Hold at Citigroup.
Cisco Systems, Inc. (NASDAQ: CSCO) Raised to Sector Perform at RBC.
Corning Inc. (NYSE: GLW) Maintained Buy but cut target to $25 at BofA/ML.
Expedia Inc. (NASDAQ: EXPE) Started as Outperform at Wedbush.
Pharmaceutical Product Development Inc. (NASDAQ: PPDI) Started as Hold at Citigroup.
Polo Ralph Lauren (NYSE: RL) named Bull of the Day at Zacks.
Priceline.com Incorporated (NASDAQ: PCLN) Started as Outperform at Wedbush.
Regeneron Pharmaceuticals, Inc. (NASDAQ: REGN) Cut to Underperform at BofA/ML.
Research In Motion Limited (NASDAQ: RIMM) Cut to Underperform at Jefferies.
RPM International (NYSE: RPM) Raised to Neutral at Credit Suisse.
Sotheby’s Inc. (NYSE: BID) called the value stock of the day at Zacks.
Tesoro Corporation (NYSE: TSO) Cut to Sell at Goldman Sachs.
TiVo Inc. (NASDAQ: TIVO) Started as Buy at Brean Murray.
United Rentals, Inc. (NYSE: URI) Started as Outperform at Credit Suisse.

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JON C. OGG

Advanced Micro Devices Inc. (NYSE: AMD) rose over 20% to a yearly high of $6.73 after the announcement that the company would receive $1.25 billion from Intel Corp. (NASDAQ: INTC) under an agreement that ends a legal dispute between the two companies over patents and antitrust accusations.  

Playboy Enterprises Inc. (NYSE: PLA) rose over 60% to a yearly high of $4.75 because the magazine is in talks to sell itself to Iconix Brand Group (NASDAQ: ICON).

Sotheby’s (NYSE: BID) rose as high as 11% to a yearly high of $19.50 after the action house raised $117 million at a sale yesterday.  

Garrett W. McIntyre

Aventine Renewable Energy (AVR) Crop prices go up, ethanol stocks down. Sells off to $4.55 from 52-week high of $20.85.

Mannkind Corp (MNKD) Inhaled insulin products run into FDA approval trouble. Shares drop 60% and hit low of $2.15 from 52-week high of $15.65.

Garmin (GRMN) Still dropping on earnings concerns. Bottoms at $45.38 down from 52-week high of $125.68.

Smurfit-Stone Container (SSCC) Paper companies hit by commodities costs and rising price of oil. Runs down to $6.65 from 52-week high of $14.08.

Douglas A. McIntyre

• Advance America (NYSE: AEA).. down over 10%, no real news released; financial exposure, although they are probably getting more and more pay day loans now. $6.08 at 3:30, old low $6.08.
• Alcatel-Lucent (NYSE: ALU)… down almost 5% at $5.29, although late day got back above that $5.27 year low.
• Borders Group (NYSE: BGP)… down another 6% ahead of earnings next week. The people that still buy books may be headed to the used book stores in tough times.  Maybe even the library.
• Brightpoint (NASDSAQ: CELL)… day in and day out this one has been getting hit.
• Build-a-Bear Workshop (NYSE: BBW)… now it can be even more opportunistic after ending strategic review and adding a larger buyback plan.
• Cenveo (NYSE: CVO)… down 14% after earnings.
• Denny’s (NASDAQ: DENN)… under $3.00 now… stock cheaper than the Grand Slam breakfast?  Maybe people can’t afford $3.00 breakfasts.
• Gannett Co. Inc. (NYSE: GCI)… after earnings people still wary of newspaper operations.
• General Motors (NYSE: GM)… flirting with 5-year lows.
• Infosys Tech (NASDAQ: INFY)… This didn’t close under the old $33.80 low of the year, but was there intraday.  Maybe outsourcing is peaking.
• Intuit (NYSE: INTU)… had no news, that pre-tax season trade getting cheaper and cheaper.
• KLA-Tencor (NASDAQ: KLAC) hit hard again after downgrade already shaved off almost 10% earlier in wee.  Down 4.4% at $36.40 with 15 minutes to close.
• Nortel Networks (NYSE: NT) at $6.34 at 3:45… High is $27.71.  What more can you say? It’s always on the list.
• Northwest Airlines (NYSE: NWA) down over 3.5% at $9.50 with 15 minutes to close. What ever happened to that merger they were supposed to be in?
• Nxstage Medical (NASDAQ: NXTM)… are kidney dialysis treatments economically sensitive?
• PDL Biopharma (NASDAQ: PDLI).. so much for that buyout hope, that’s already been called off.  Almost under a $1 Billion market cap.
• Pfizer (NYSE: PFE)… a true surprise to see this one here again.  Will it bust $20? Shares down 3% at $20.55 with 10 minutes to close.
• Qwest Communications (NYSE: Q)…. now under $5.00.
• Savvis Inc. (NASDAQ: SVVS)… down more than 5% to under the old $15.14 low. Doing IT, bandwidth, storage, network infrastructure, not as great when you have huge exposure to financial institutions.
• Sony Corp. (NYSE: SNE)… just when it was getting its act back together… $41.81 right before close; old 52-week low was $42.10.
• Sothebys (NYSE: BID)… down more than half from highs.  Wall Street’s "Even the rich are bitching!" must apply to high-end auctioneers too.
• Time Warner (NYSE: TWX)….. now under $14.00.

Jon C. Ogg
March 14, 2008

• Blockbuster (NYSE: BBI) raised to Overweight at JPMorgan.
• Borg Warner (NYSE: BWA) cut to Neutral at JPMorgan.
• Boyd Gaming (NYSE: BYD) cut to Underweight at KeyBanc.
• CDC Corp. (NASDAAQ: CHINA) started as Buy at Cantor Fitzgerald.
• Chimera (NYSE: CIM) started as Neutral at JPMorgan.
• Lear (NYSE: LEA) cut to Neutral at JPMorgan.
• RF Micro Devices (NASDAQ: RFMD) downgraded to Hold at Jefferies.
• Sotheby’s (NYSE: BID) raised to Outperform at JMP Securities.
• Western Digital (NYSE: WDC) and Seagate (NYSE: STX) were both cut to Hold from Buy at Citigroup.
• Varian (NASDAQ: VARI) raised to Buy at UBS.

Jon C. Ogg
February 28, 2008

Apparently there are fears that the art auctions are going to see their own recession, even though the company has not made any indications of that as a trend.  A Vincent Van Gogh landscape titled "Wheat Fields" that was painted shortly before his death went unsold.  Also coming up light were works of Picasso and Gaugin.  This last auction fetched $270 million, far short of a pre-sale estimate of $355 million.  It is a reminder of the movie ‘Wall Street’:  "Even the rich  are bitching!"

Banc of America cut the shares to ‘Neutral’ from ‘Buy,’ and boutique JMP Securities cut the rating to ‘Market Perform’ from an ‘Outperform’ rating.  Shares are already up over $4.00 from intraday lows at $35.70, but shares reached $31.20 in early trading.  The 52-week trading range is $29.81 to $61.40. 

24/7 Wall St. has had Sotheby’s as a potential "private equity wish list stock," although because of a prior dual class and prior voting control under the Taubman’s, we never did much work other than have it on a watch list.  After a quick glance this morning it appears the only change in control procedures now would basically require enhanced management payouts (simplification), but that is only giving it a quick look and we wouldn’t want to make any bold takeover or anti-takeover notes with an in-depth look.  We may revisit this for our Special Situation Investing Newsletter now that this has come off so much.

Jon C. Ogg
November 8, 2007

Jon Ogg produces the Special Situation Investing Newsletter; he does not own securities in the companies he covers.

On a call-in Cramer said he also liked Ralph Lauren (RL-NYSE) since it is reacquiring all of their global licenses outstanding.

Cramer also came out discussing that Uranium has gone throught the roof.  He already gave a pick on Energy Metals (EMU-NYSE) back in February, and here’s what he said then.  He has two stocks that you can speculate on in the sector.  He says that you can extract Uranium from Phosphate.  It costs $50.00 per pound to do it (very expensive historically) but with Uranium at $113 per pound then you can look at Mosaic (MOS-NYSE) and CF Industries (CF-NYSE).  There are unintended consequences though because it can drop the price drastically.  Cramer noted that these companies have both done this in the past, and he said he likes them even if Uranium prices come back down.  With the number of nuclear power plants coming online, Cramer thinks that will be a big win.