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Nov.04
7:09 PM ET
Tuesday, 4 Nov 2008
Why Staples Is the Superior Stock

Don’t be fooled by the recent near-100% moves in Office Depot and Office Max, Cramer said during Tuesday’s Stop Trading!. These stocks are pure speculation, and they’re not even good speculation at that.

Office Max [OMX  Loading...      ()   ] and Office Depot [ODP  Loading...      ()   ] are both under-$10 names that soared 92% and 98%, respectively, over the past week, but the businesses behind these names don’t measure up to the real leader in this space, Staples [SPLS  Loading...      ()   ].

At least that’s how Cramer sees it. Staples beats the two Offices on every key metric: operating margins, same-store sales, number of outlets, expected growth of these outlets – you name it.

And don’t think that just because Office Max and Office Depot are single-digit stocks that there’s any change they’ll get a takeover offer. If you look a little deeper into the balance sheets, you’ll see that both companies have debt that far exceeds their market capitalizations. Potential suitors will take note, most likely disqualifying them from a buyout, so you should, too.

Meanwhile, Staples is doing the acquiring, picking up Corporate Express to boost international growth, and, as we said, opening more stores within the U.S. at a faster rate, and with greater efficiency, than its competitors.

So if you’re thinking of buying a stock in this business, Cramer thinks it should be Staples.






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