M - Smart Money Says Macy's Is Too Cheap

2024-03-05 08:50:13 ET

Summary

• Macy's stock has surged 56% since my last article, driven by takeover interests and a higher bid of $24 per share.
• The company is in a good spot to ask for an even higher offer, as it is working on a promising turnaround strategy, that will reshape Macy's business model.
• While uncertainties persist, the company continues to trade below its fair value, with M&A developments functioning as a catalyst.

Introduction

Generally speaking, I am very happy with the way most of my calls have unfolded in the past 12 months (and before that).

Nonetheless, I need to start this article by admitting I was wrong on Macy's, Inc. ( M ) , a stock I have been neutral on for a while.

After I wrote my most recent article on November 16, titled " Macy's Stock Pops Higher, Yet I Doubt It Will Last," the stock took off. It's now 56% higher after I wrote this:

Although a post-earnings stock price surge occurred, a sustainable consumer recovery is key for a cautious investor like me, which is why I am maintaining a Neutral stance on Macy's.

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