RadioShack Corporation (RSH)’s Uphill Battle

Boring is better

It should come as no surprise that Wal-Mart Stores, Inc. (NYSE:WMT) is looking to get involved in yet another market. This time, it’s targeting low-priced prepaid wireless services, which should be in high demand going forward. Consumers despise contracts and love simplicity. And Wal-Mart isn’t likely to stop there.

Wal-Mart Stores, Inc. (NYSE:WMT) is far from an exciting investment, but it has long been a profitable one. Unlike RadioShack and Best Buy Co., Inc. (NYSE:BBY), margins are positive. Wal-Mart has also improved revenue and earnings annually and its enormous selection of products at everyday low prices consistently drives people to its stores.

It currently yields 2.40%. Based on the company’s quality debt management, the dividend appears to be safe. Wal-Mart Stores, Inc. (NYSE:WMT)does have to deal with competition from dollar stores, Target Corporation (NYSE:TGT), Costco Wholesale Corporation (NASDAQ:COST), and Amazon.com, Inc. (NASDAQ:AMZN), but Wal-Mart should be able to maintain market share. As smaller retailers fail, more shoppers will visit Wal-Mart.

Conclusion

If you’re looking for a highly speculative play, then you could do worse than RadioShack. While its new CEO appears to have the company going in the right direction, it may be too late. Best Buy Co., Inc. (NYSE:BBY) is also high risk, but the odds of a turnaround are better.

Wal-Mart Stores, Inc. (NYSE:WMT) might not be a direct competitor, but it’s capable of stealing market share from both RadioShack and Best Buy Co., Inc. (NYSE:BBY). Wal-Mart also comes with extreme product diversification, strong historical stock performance, resiliency to bear markets, and a 2.40% yield. If you’re looking for capital preservation, then Wal-Mart is the easy choice.

The article RadioShack’s Uphill Battle originally appeared on Fool.com and is written by Dan Moskowitz.

Dan Moskowitz has no position in any stocks mentioned. The Motley Fool owns shares of RadioShack. Dan is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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