Our Stock of the Week is Kohl’s Corporation (KSS). KSS operates around 1100 retail stores in 49 states in the US, as well as a website.
While the company has single-digit EPS growth, it is trading at a PE of just 8x. However, the story here is a potential take-over. Several suitors have expressed interest. Canadian Department Store owner Hudson Bay, which is the parent company of Saks Fifth Avenue, is a likely front-runner in what may be a bidding war for the company. Several private equity firms have shown interest as well. KSS has hired Goldman Sachs to lead the sales process. There is speculation that that could be sold in the ‘high 60s’ but could go higher.
The chart pattern is quite attractive, with the current highs around $64 as overhead. It may take some time for a deal to progress, but the chart reflects optimism that something may come soon. It is currently expected that there will be news prior to the annual meeting on May 11.
As always, we would not chase this stock to start the week but will look to accumulate it incrementally as it develops.
This post is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this post. Do not buy, sell, or trade the stocks mentioned herein. We WILL actively trade this stock differently than discussed herein. We will sell into strength and will buy or sell at any time for any reason. We will actively trade into any unusual activity. At the time of this post, principals, employees, and affiliates of Shark Investing, Inc. and/or principals, clients, employees, and affiliates of Hammerhead Financial Strategies, LLC, directly or indirectly, controlled investment and/or trading accounts containing positions in KSS. To accommodate the objectives of these investing and/or trading accounts, the trading in these shares will be contrary to and/or inconsistent with the information contained in this posting.