RadioShack Corporation (NYSE: RSH) is doing badly enough in general that shares are almost at another 52-week low.  To add insult to injury, that is happening at a time when the market has been screaming and when the S&P has seen double-digit returns since the start of 2012.  With this low to no growth model and a very tired story, we wonder if the stock is getting anywhere close to a point where value investors can start to nibble.  In many cases, the electronics retailer is just a miniature version of Best Buy Co., Inc. (NYSE: BBY) and it shares many of the same woes.

The first consideration is that RadioShack looks like a value trap rather than a value stock.  It trades at less than ten-times expected earnings, but there is no real catalyst here.  The technology retail outfit was up for sale and had no takers at higher prices.  Now that shares are at $6.57 and the 52-week range is $6.50 to $16.70, some would ask if a buyout would be possible now.

While anything is truly possible, the company might not be able to get away with accepting any at-market bid from a private equity shop.  Shareholders are long and wrong here and many would vote against a merger to avoid losses.  Many others would likely band together in a class action suit.

Is 9-times or 10-times earnings expectations very expensive?  No.  Again, there is just no growth and no catalyst.

RadioShack is worth only $653 million in its market capitalization as of now.  Even at $6.57, the consensus analyst target is almost $8.00.  It needs to be noted that analysts have been long and wrong here too by keeping higher price targets.

BB&T recently suggested that margins were going to be pressured here for the foreseeable future as it relies on selling iPhones and other devices.

RadioShack is not really a defensive stock that lags in a bull market but holds up in a bear market.

The real issue is the balance sheet.  It trades at a discount now to its tangible book value.  It is worth noting that the $716 million in net tangible assets at the end of 2011 compares to $801 million at the end of 2010 and compares to $917 million as of the end of 2009.  Will it keep dropping?  If history is any prediction tool, then it is likely.

The fundamentals just do not offer much here for investors.  RadioShack looks like a value stock, but it still feels like a value trap.

JON C. OGG

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