Office-supply retailers have taken a beating over the last year, but Brad Thomas, retail analyst at KeyBanc Capital Markets says he sees some upside for the sector ahead.
“More Americans employed means more paper, pens, ink and toners purchased,” Thoams told CNBC.
Thomas has a“buy” rating on Office Max . Meanwhile, he has a “hold” rating on both Staples and Office Depot .
“We’re finally seeing job growth move into positive territory … and the office product sector is one that’s seen challenging topline trends through 2010,” Thomas explained. “So it’s a sector we’ve seen a ton of costs ripped out, much more rational promotions and if we see a positive topline growth for the sector, it could lead to some nice earnings upside and that’s what we’re optimistic about seeing in 2011.”
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Thomas has investment banking clients who own shares of ODP, OMX and SPLS.
Keybanc Capital owns shares of SPLS.