One of our favorite stocks for 2012 is OfficeMax (OMX), a leading seller of office products in both the business-to-business and retail channels. �
The stock declined steadily through much of 2011 as investors fretted about the possibility of a new recession in the U.S.
The current incarnation of� OfficeMax began to take shape in late 2003 when Boise Cascade, a large lumber and forest products company that also sold paper and office supplies, bought OfficeMax, a chain of
About a year later, the company sold its forest products and timberland assets and adopted the OfficeMax name.� The company now operates more than 900 retail stores and has a contract business (selling directly to offices)� with more than $3.5 billion in sales.
While OfficeMax is sensitive to economic activity, we believe that investors have significantly overreacted in dumping the stock. It now looks as though the economy isn�t doing so badly after all. �
Moreover, even if there is some weakness in business spending, OfficeMax is now much more efficient than it was in past downturns.
The company is focusing on several areas for new growth, including overseas expansion, increased online presence and new �integrated solutions� for offices. �
By most measures, the stock looks very cheap, with a price-to-earnings ratio of less than nine and a price-to-sales ratio of 0.05 (both based on trailing 12-month numbers). �
Even without renewed growth, a slight change in investor perceptions about OfficeMax could send the stock up sharply. �
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