Consider This Your Mulligan for Sears Hometown and Outlet Stores Inc (SHOS)

Secondly, it can buy “as-is” appliances from its parent, Sears Holdings, at advantageous prices due to their separation agreement. Regardless of your thoughts on the company, Sears remains the largest purveyor of appliances in the U.S. To top the deal off, if Sears Hometown and Outlets is unable to sell those appliances it buys from Sears Holdings, it is contractually allowed to sell back the merchandise at cost to its parent — eliminating a substantial amount of inventory risk. No other appliance dealer can boast this good of a deal.

The company is opening more stores in the new formats and closing the old ones. With just 126 outlet stores, but a mere blip on the national retail landscape, it possesses a fantastic growth runway for the next couple of years. And considering the new stores encouraging performance, I am very excited for the coming proliferation.

Stop whining, start investing
Sears is a bad word, just like J.C. Penney. But that’s being short-sighted. This company is generating meaningful free cash flows and it is only the beginning. Sure, January sales were a bit soft, but that doesn’t derail Sears Hometown from its long-term goals. With a favorable housing environment for purchasing big-ticket items, and an unbelievable supplier relationship, I stand firmly behind Sears Hometown and Outlet Stores Inc (NASDAQ:SHOS) as a top retail pick.

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