NEW YORK (TheStreet) -- Actions always speak louder than words.
That is especially true when it is a retailer slamming the doors shut on about 500 stores, as RadioShack (RSH) is doing. For those looking to profit, it will be almost impossible to find any shares of RadioShack to short as the float is already over 45%, according to Yahoo! Finance.
For those considering going long on RadioShack, don't. RadioShack is a classic value trap, not a value play.
A value trap is company that looks to be undervalued due to how low the stock is trading on a price-to-book and price-to-sales ratio. With a price-to-sales ratio of 0.06 and a price-to-book ratio of 0.57, RadioShack certainly appears to be a value play. But those ratios are not a result of the market inefficiently pricing RadioShack.
Its sales are plunging. Sales growth for the past five years was flat. Quarterly sales growth is down by 10.30%. Same-store sales are down 8.4% for the most recent quarter. There is no missing value in the sales aspects of RadioShack as it is clearly on a downward trend for sales, which is the lifeblood of a retailer.
Another reason this is a value trap: The assets are not undervalued.