Dividend.com: What's Driving RadioShack?
08/25/08 - 02:42 PM EDT
Tom Reese and Paul Rubillo
What Is Driving RadioShack Higher?
Radio Shack (RSH Quote - Cramer on RSH - Stock Picks) is now up more than 50% in the last six weeks. Are we missing something? The stock, based on recent price performance alone, is making a bid to get on our recommended list. What exactly is driving the run-up? It wasn't Apple's(AAPL Quote - Cramer on AAPL - Stock Picks) iPhone deal with Best Buy(BBY Quote - Cramer on BBY - Stock Picks). And the last time we checked, the economy was looking pretty tenuous, with unemployment claims still rising. It does appear part of the run may be from the company's surprisingly strong same-store sales, which rose 6.9% in the second quarter, on sales of items that include, among others, global positioning system devices and prepaid wireless phones. And on Aug. 12, S&P upgraded the company's outlook to "stable" from "negative," despite a decision by RadioShack to offer $300 million in convertible senior notes. We currently have RadioShack shares on our upgrade watch list. The stock's recent upward movement simply can't be ignored. This recent surge could, of course, be fleeting, so investors need to be careful with this stock. The company has a fairly low 1.32% dividend yield, based on Friday's closing stock price of $18.93. RadioShack isn't a recommended dividend stock at this time, holding a Dividend.com rating of 3.4 out of 5 stars. Removing Two Big Gainers from Recommended List We are removing two recent highfliers from our recommended list, as current price action is beginning to indicate some potential warnings for these dividend stocks. It's never easy to sell stocks that have been on a tear, but the key to outperforming and achieving top results requires the courage to do so. We took a second look at Graham(GHM Quote - Cramer on GHM - Stock Picks) over the weekend, and noticed the height of the bounces after recent stock drops has been trending downward. The stock averages only 220,000 shares traded daily, so it's not as liquid as many other stocks.
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