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Will MaxPerk Up?
by
Christina Nikolov
Founder/CEO, ChartWatchCentral, Inc.


Date: May 08, 2008
Company: OfficeMax
Ticker: OMX
Price: $19.04
Opinion: Bullish
Comments: After losing more than two-thirds of its value between February 2007 and January 2008, shares of OfficeMax (OMX) have spent the past four months consolidating between $18 and $26, tracing out what appears to be a double bottom. With price-to-book, price-to-earnings and price-to-sales multiples of 0.64, 7.0 and 0.16, compared with respective figures of 6.70, 41.7 and 1.90 for the Retail (Specialty) Industry and 3.99, 19.1 and 2.62 for the S&P 500, the shares appear to be an exceptional value at this level.

Even better, the per-share earnings five year growth rate for OMX is 88%, versus nearly 24% for both the industry and S&P500 Stock Index. And if that isn't good enough, OMX touts a dividend yield of 3.2%, compared with average yields of 1.6% for it's peer group and 2.4% for the S&P500 Stock Index. Eventually, all divergences between technicals and fundamentals will be resolved, pushing the shares substantially higher.

Fundamental Snapshot

OfficeMax (OMX)

Retail (Specialty) Industry

Current P/E Multiple1

7.0

41.7

Price to Book2

0.64

6.7

Price to Sales1

0.16

1.9

Five-year EPS Growth (%)3

88.4

23.9

Dividend Yield (%)

3.2

1.6

Revenue/Employee1

248,573

566,583

1) Trailing 12-months. 2) Most Recent Quarter. 3) Annualized. (All data provided by Reuters.com)

To profit from this opportunity, we suggest initiating a long position at the current level. Or if you want a little more bang for your buck, you might wish to purchase the January 2010 $17.50 call (ticker: .YYBAW), which was last offered at $5.00. There is likely some overhead resistance near $21, as well as at the formation's apex, near $25, which must be overcome before any significant upside can occur. And since there should be strong support near the January and April lows (near $18) you might want to place a stop loss somewhere below $17 (depending on your personal risk tolerances), to protect yourself on the downside, should the shares move against you.

Note: Symbols of LEAP options change regularly, so please be sure you are trading the correct security.


Disclaimer - The investor is aware and agrees that if they choose to invest in any recommendation posted on ChartWatchCentral's website, they are doing so totally at their own risk. ChartWatchCentral will not be held liable for any losses or negative impacts which might result from investing in these picks.

Stock Picks by Christina Nikolov 

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