Dogs of the Dow

[PoemStone]

Office Depot (NYSE: ODP ) [Motley Fool] "1 Stock to Sell by February."

On the surface, Staples and Office Depot have similar office-supply-and-services-slinging business models -- both surprisingly place on the list of top 10 Internet retailers, both rely heavily on the business-to-business market, and both have a significant international presence.

But as any football coach will tell you, it all comes down to execution.

While Staples has been growing sales (granted, with the help of the Corporate Express acquisition a few years ago), Office Depot has shrunk sales by 26% since 2007. While Staples has maintained healthy earnings and cash flows throughout the tough economic times, Office Depot hasn't had the virtuous combination of positive earnings and positive free cash flow since 2006. While Staples covers its interest by a factor of eight, Office Depot is at less than two. And, of course, that leaves no room for Office Depot to pay a dividend.

Staples is clearly the better company here. Let's also not forget that Office Max (NYSE: OMX ) , though highly levered, is doing better than Office Depot operationally as well.

Now, the danger for Office Depot bears like me is that its stock is so beaten down (it's trading at well less than 10% of the market cap of Staples) that if its turnaround plans come to fruition, we could see a tremendous upside.

But hoping and wishing and praying for a third-in-class specialty retailer to suddenly start turning the tide on its proven direct competitors and Wal-Mart, Target, Costco, Amazon, et al. in an iffy economy is a pure gamble.

Do yourself a favor and avoid Office Depot. Look into Staples instead
http://www.fool.com/investing/general/2012/01/11/1-stock-to-sell-by-february.aspx