Is Radio Shack’s Stock Finally on Sale?

With shares of Radio Shack Corporation (NYSE:RSH) trading at around $2.22, is RSH an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

If you were a little kid in the 1980s, then you might remember the days of your dad saying, “Get ready, kid. We’re going to Radio Shack!” You were beyond ecstatic. You knew this meant a chance at a new remote-control car. Even if you didn’t land a remote-control car, you would still have an opportunity to walk around the store and play with all the cool gadgets. The worst-case scenario was that you got some new batteries for a toy you hadn’t played with for few weeks. If a father today were to say to his kid, “Get Ready, kid. We’re going to Radio Shack!” the kid would likely reply, “What’s Radio Shack?”

The past few years have been brutal for this once-legendary retail name. Radio Shack has attempted to switch gears by focusing the majority of its attention on mobile, but the margins there are thin and the competition is fierce. However, let’s take a look at what’s available.

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If you walk into a Radio Shack today, you might find a Samsung Galaxy S III for $99 (must activate a 2-year contract,) a Kyocera Rise on Virgin Mobile for $49.99 (no contract,) $50 off the HTC Desire C (no contract,) and a buy one/get one free offer on the HTC ONE X on AT&T (NYSE:T) (must get 2-year plan with monthly data plan.) The no-contract plans are especially appealing at the moment because they make great Christmas gifts. Other items you might find in the store include remote-control cars, high-definition headphones, Bluetooth speakers, and train sets. Sounds like fun, but you can get most of these items at other places.

Radio Shack’s profit margin is -1.48 percent, they have an operating cash flow of -$12.70 million, and they have lost money for three consecutive quarters. Let’s take a look at some more important numbers.

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