Sears Holdings Corporation (SHLD) Is Cheap (What Else Is New?)

The company is also looking to raise an additional $500 million, possibly via sale or merger. A writer at Investopedia noted that a J.C. Penney Company, Inc. (NYSE:JCP) –Sears combination has more merits than most would imagine, though I am not sure that two wrongs make a right at this point. A merger of the two would create a real estate behemoth, trumping other department stores’ square footage (combined) by a long shot.

Whether the company sells itself or not, its valuation remains incredibly low. Should price-conscious investors take the bait?

Better options
In short, I prefer both Sears Hometown and Outlet Stores Inc (NASDAQ:SHOS) and Sears Canada for their stronger operating prospects, especially those of the former. Sears Hometown has a long growth runway for its appliance stores, and its ongoing conversion to franchise-owned stores makes for better gross margins, as well as shifts many up-front costs to the individual store owner. Sears Canada is in the midst of a major renovation — pumping money into stores while shrinking employee count. Sears Canada trades at a fraction of one-year sales and will benefit from even a modest turnaround in store performance.

As it has been for some time, Sears Holdings Corporation (NASDAQ:SHLD) is a bargain if the company can manage just a slight turnaround in its operating performance. There is little question that its real estate is being offered for a fraction of its value — the market just seems to be waiting for that space to be better utilized. Still, the company’s future is uncertain, and investors would sleep better looking at the Sears’ spinoff and independently traded subsidiary. Read more on those stories here and here.

The article Sears Is Cheap (What Else Is New?) originally appeared on Fool.com.

Fool contributor Michael Lewis has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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