A Most Hated Stock

It is hard to find a more hated stock than RadioShack Corp. (NYSE – RSH - $3.62.)  For the record, I don’t remember anyone ever making money on it.  And I am thinking back to 20 years when it was known as Tandy.  It is in the retail consumer electronics business which is taking it on the chin from online competition and general slowing in the space.  The stock is down over 60% in 2012 and roughly half of the public float is shorted. Further evidence of the zero confidence in progress (let alone existence) is the fact that the current annual dividend yield is over 12%.

As we highlighted in the most recent The Goldman Guide, the ten-year Treasury is under 1.5%, so this dividend has substantial risk and will surely be reduced, suspended or eliminated if financial and business issues persist.

With that said, I will be watching the release of its 2Q12 financial results closely on Wednesday July 25^th.  Who knows? Maybe the shorts cover, the dividend gets reduced to a normalized level, restructuring occurs, and the company attracts interest from a prospective buyer? Doubtful, but possible.  More pain is likely first, but RSH could emerge as a deep value, but risky play.

Stay tuned.

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