10 Cheap Retail Stocks to Buy According to Analysts

4. Office Depot (NYSE:ODP)

Forward P/E: 7.84

Analyst Upside Potential as of September 23, 2024: 20.21%

Number of Hedge Fund Holders as of Q2 2024: 26

Office Depot (NYSE:ODP) provides business supplies, services, products, and digital workplace technology solutions to small, medium-sized, and enterprise businesses. Its operations are divided into four segments: ODP Depot Division, ODP Business Solutions Division, Varis Division, and Veyer Division. The Office Depot Division provides retail consumer and small business products and services through an omnichannel platform. The ODP Business Solutions Division sells the company’s privately branded and nationally branded office supplies and adjacency products and services to customers. The Veyer Divison specializes in B2B and consumer business service delivery, with fulfillment, distribution, purchasing, and global sourcing. Office Depot’s Varis Division encompasses a B2B-centric digital commerce platform that offers businesses the procurement controls and visibility required to operate.

The company is expediting several initiatives based on its performance in Q1 2024 to combat the ongoing macroeconomic headwinds it is facing. Such endeavors are positioning the company to drive greater revenue velocity exiting 2024. It is also focusing on strategically transforming its top line growth trajectory in its core business. Office Depot (NYSE:ODP) is driving business transformation, and AI process focus across its entire enterprise to benefit from productivity opportunities to fuel future growth and boost capital allocation opportunities.  It also made substantial progress under its Project Core, which was aimed at streamlining its operations and sharpening its core focus.

Office Depot (NYSE:ODP) recently began its five major business process improvement initiatives, known as the Big 5. These initiatives are expected to drive significant growth and profitability in 2025. It is also engaging in partnerships to drive additional traffic to its retail division. Apart from investments in its core operations, the company repurchased a significant amount of shares, amounting to more than $140 million of stick in this quarter. This also includes more than $170 million under the recently announced authorization. The company is continuing to balance its capital allocation strategy, keeping market conditions and business performance in check.

With several initiatives in place, the company is on track to achieve annualized run rate savings of at least $100 million when implemented completely. This will help solidify its position for future growth, giving it a competitive edge. Office Depot (NYSE:ODP) is managing these savings through cost-efficiency measures undertaken across the entire enterprise, including its supply chain, organizational structure, and cost of goods sold savings through further efficiencies.