Staples, Inc. (SPLS) Stock Could Have Much Further to Rise

Staples, Inc. (NASDAQ:SPLS) has long been the crown jewel among office-supply retailers, with competitive advantages that have forced its main rivals to combine forces in an attempt to survive. Yet even with all the good things that have been going on with the company lately, Staples, Inc. (NASDAQ:SPLS) stock only recently managed to hit 52-week highs, and it still trades for just over half what shares fetched as recently as early 2010.

As with most retail niches, office-supply sellers have had to adapt to competition from online retail. But one of Staples, Inc. (NASDAQ:SPLS)’ greatest strengths is its attention to its e-commerce business, which is itself one of the most successful Internet-based sales operations nationwide. Let’s take a closer look at Staples to see why its stock has so much potential.

What’s been happening with Staples?
The biggest news that has affected Staples, Inc. (NASDAQ:SPLS) recently is the merger between its two main rivals, Office Depot Inc (NYSE:ODP) and OfficeMax Inc (NYSE:OMX). Initially, Staples stock moved in lockstep with its two rivals, initially rising with the two on the news and then falling back after investors digested the deal and apparently concluded that the transaction indicated weakness not just with the two retailers directly involved in the transaction but also with the industry’s other major player as well. Since then, shares of all three companies have moved higher, but with Office Depot Inc (NYSE:ODP) and OfficeMax Inc (NYSE:OMX) likely to close stores once the merger is complete, Staples will be able to fill the vacuum with potentially lucrative expansion in certain markets.

But even without any merger-related gains, Staples, Inc. (NASDAQ:SPLS) has found ways to succeed. In its most recent earnings report, revenue dropped 3% year-over-year, but the company has refocused its attention to its online retail website. Onilne sales rose 3%, and with a restructuring that has led to smaller stores and decreased square footage while expanding the number of products available to online shoppers, Staples is clearly taking a lesson from its Internet-retail competitors to cut overhead and focus on cost-cutting.

The surprising benefit of Staples stock
What’s most intriguing for many investors lately has been the steady ascent of Staples, Inc. (NASDAQ:SPLS)’ dividend. Office Depot Inc (NYSE:ODP) never paid a dividend, and OfficeMax Inc (NYSE:OMX) has only recently started making payouts again. But even with the rise in Staples’ share price, its yield has stayed relatively high.

Staples Dividend Yield data by YCharts.