No. of Recommendations: 1
as a BMW neophyte, is it better to buy and get the 4% dividend with the outlook that Staples will thrive and be a long term winner


The BMW Method is about price movements, the dividend is just gravy.

or look at other undervalued stocks with a 2 RMS that appear to have a shorter horizon for gaining valuation

People focus on RMS but back testing by Mike Klein, of Klein Chart fame, has shown that RF is a better indicator of future performance.

But in any case, you should not buy the stock for the dividend, for the RMS or for the RF. Buy only if you are convinced that the stock has been unfairly oversold and that there are good reasons to believe it will bounce back. That requires researching the company thoroughly.

What would make Stales bounce back?? When I look at the price chart I get little hope:

Just reading the chart, the drop in 1999-2000 is rather sharp and probably the SPLS bubble bursting. But the decline 2006 onward looks like a tired stock, long term holders losing faith in the stock. This is not the kind of drop that is likely to have a fast reaction. It is not enough to know what the charts says. You have to know why the chart is saying whatever it is saying. Does the chart resonate with real world data? It does. Management expanded to Europe at the wrong time!

Welcome to the exciting world of BMWM! ;)

Denny Schlesinger
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