How to Buy Sears (SHLDQ) Stock

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Contributor, Benzinga
Updated: June 16, 2022

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Illinois-based Sears has had a rough time for the last half-century. Once the largest player in the retail field with its stock trading over $195 per share, Sears Holdings (OTCMKT: SHLDQ) stock has since been relegated to the OTCMKT or “pink sheets” market and now trades under $0.30 per share. 

If you plan on buying Sears Holdings stock, you’ll find a lot for sale at a very low price. The company’s woes are reflected in its depressed stock price, so unless you’re willing to risk your entire investment in the stock, consider other choices before you include SHLDQ stock in your plan for retirement.

Quick Look: How to Buy Sears Stock

  • Step 1: Select an online brokerage that allows you to trade how you like. If you're a beginner, pick one with educational resources. If you're an experienced trader, find one with an advanced trading platform.
  • Step 2: Practice using your broker's demo or virtual account. This allows you some time to adjust to the market without risking your own money.
  • Step 3: Put money into your trading account. Once you are ready to enter the market, you can fund your account in order to make your investments.
  • Step 4: Purchase SHLDQ. Once you are ready to enter the market, you can make your purchase.

Sears History and Stock Performance

Sears’ history begins in 1887, when Richard Sears and Alva Roebuck relocated their mail-order watch and jewelry company from Minnesota to Chicago. The company expanded their product line and soon the Sears catalog had grown to 322 pages. 

Sears held its initial public offering (IPO) in 1906, selling preferred shares at $97.50 each, and the stock became a component of the Dow Jones Industrial Average in 1924. The company kept growing and began opening stores all over the U.S. in the 1920s, in addition to its enormous catalog mail-order business. 

Sears expanded into Canada and Mexico and reached its peak in the early 1970s. The construction of the Sears Tower began in 1974 in Chicago, which was the tallest building in the world when it was erected. As things started going downhill for Sears, the stock was removed from the Dow in 1999, although the company’s decent management helped it survive difficult times in the late 1990s. 

The stock even achieved its recent high point in April 2007, when SHLDQ stock reached $195.18 per share. The subsequent Great Recession took its toll as the company suffered a series of significant setbacks that led to it declaring bankruptcy on October 14, 2018.  

image1-5
Long-term price chart for SHLDQ stock with earnings and volume below.
Source: www.tradingview.com

Future Outlook for Sears

After not making a profit since 2010, Sears Holdings sold its stores and most of its assets in January 2019 to ESL Investments Inc., a firm owned by Eddie Lampert, the Chairman of Sears Holdings’ Board.  

Lampert, with Sears since 2005, oversaw the retailing company’s merger with its competitor Kmart. In the transaction with ESL Investments, he bought whatever assets were left with any value, leaving stockholders with the shell-holding company listed on the pink sheets as the SHLDQ stock. He stated in a February 2019 press release that the corporation had been acquired for a total consideration of approximately $5.2 billion.  

The “new” Sears, now owned by Lampert’s private company, Transform Holdco, consists of 223 Sears stores and 202 Kmart stores, as well as all of Sears’ prominent brands and operating businesses, including Sears Auto Centers, Sears Home Services, Kenmore, DieHard and Craftsman. 

The “old” Sears is however in litigation with the “new” Sears, claiming that the new Sears owes an additional $57.5 million to the old Sears from the sale. In addition, a pending lawsuit filed by old Sears in April 2019 alleges that Lampert and his associates siphoned billions of dollars in assets from it as the company descended into bankruptcy. 

At best, the future outlook of the old Sears Holdings company is murky. While Lampert maintains that he will turn the new company around, the old Sears Holdings that still has its stock listed on the OTC market as SHLDQ would not participate because the new Sears is currently wholly owned by Lampert. 

On the other hand, if the lawsuits filed by the old Sears against Lampert and associates go to trial and win or are settled favorably, then having a stake in SHLDQ stock might make sense to a trader or investor comfortable with the high risk involved.

Trading companies like Sears is not for beginners, as it trades on the OTC pink sheets.

image2-3
15-year graphic of the net yearly percentage change in SHLDQ stock.
Source: www.tradingview.com

Why You Might Want to Buy It

Here are a few reasons why Sears might make a great, next addition to your portfolio.

  • Purely speculative trade: If you have disposable funds that you wouldn’t mind taking a total loss on, then you could buy some shares of SHLDQ stock. Ideally, you would put the shares into an account and forget about them until news of a settlement with the various lawsuits and bankruptcy proceedings goes through, possibly toward the end of this year. This position is much like owning a call option with no expiration date, since you have limited downside and unlimited upside potential at a rather low strike price. 
  • Possible favorable settlement: Once the bankruptcy and related lawsuits settle, possibly either Lampert will be forced to purchase the remaining 100 million outstanding shares of SHLDQ stock or pay a cash settlement to the old Sears stockholders. If so, your investment could be trading at a higher price by years’ end. 
  • Low-Risk, High-Reward Scenario: The current situation, with the company split and the two factions in litigation, could end with SHLDQ stock going to zero, the Lampert faction buying out the rest of the shares, or some portion of the assets that Sears Holdings claims were fraudulently obtained by Lampert being returned to the old company.  

Considerations Before You Buy

Before you purchase SHLDQ, here are a few things to take note of.

  • Economic, stock market downturn: At $0.28 per share, there really is not much room for the stock to sell off in a market downturn, especially since the old holding company does not currently hold any retail stores. Yet if a settlement is reached that gives the holding company some economic exposure and the price of SHLDQ stock gains in the near future, then a downturn could negatively affect the stock’s price.
  • Bankruptcy proceedings end favoring Lampert: If the court rules in favor of Lampert and associates, then the remaining SHLDQ stock could become worthless and get delisted from the pink sheets. Lampert has effectively hollowed out all of Sears’ assets and resources that were worth saving to benefit his own companies, so the pending lawsuit is all that the old company has going for it. 
  • Limited upside potential for SHLDQ stock: Regardless of how the court rules, you could see as high as about $1 per share for SHLDQ stock, barring any large settlement in favor of the old Sears Holding company. While this is almost four times the current SHLDQ stock price, you might have to wait to cash in, at least until the end of this year when bankruptcy proceedings conclude.  

How You Can Buy Sears Stock Right Now

To buy SHLDQ stock, you can choose any reputable broker who has access to trade stocks listed on the OTCQX. Due to the uncertain nature and the high risk involved with stocks listed on the pink sheets, not all brokers allow clients to execute trades on the OTCQX market. 

If you already have an account open with a stockbroker, you might want to check with your broker about whether you can trade pink sheet stocks in your account. For example, Robinhood, which generally offers commission-free trading, does not allow clients to execute trades on the OTCQX exchange. Keep in mind that how you buy Sears stock is just as important as where you trade, so make sure you pick the right broker.

  1. Pick a Broker

    Knowing your needs in an online brokerage will make your decision faster and easier. If you need an online broker to execute trades in multiple assets using a state-of-the-art trading platform, then Interactive Brokers would probably be a good fit with their sophisticated Trader Workstation trading platform and access to over 120 world markets.
      
    Other brokers that can access the OTCQX market include E*TRADE, which also has a bank associated with it, and TD Ameritrade. Both of these brokers offer plenty of educational and research resources and have user-friendly trading platforms. 

  2. Open Demo Accounts to Assess Trading Platforms

    Most online brokers offer their clients a virtual or demo account that does not require the user to risk any of their funds to practice trading. You could open several of these accounts with prospective brokers to assess their trading platforms and see if their services and trading platform fit your needs.

  3. Fund an Account

    After completing the previous steps, you are ready to fund your trading account to buy SHLDQ stock. Depending on the number of these shares you want to purchase, you will need to deposit the appropriate amount of funds. Different brokers have different funding and minimum deposit requirements, so make sure you check with your broker to determine the best way to fund your account. 

  4. Start Buying SHLDQ Stock

    Once your trading account is funded, you can now place a bid on SHLDQ stock on the OTC market. You might want to watch the stock for a session or two but with SHLDQ trading under $0.30 per share, even a 2 cent move would represent roughly seven percent of the stock’s price. At current levels, you could buy 1,000 shares for $280 plus commissions, which might be worth taking the risk on if you don’t mind losing the entire amount.

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Is SHLDQ Stock for You?

Even though you might lose your entire investment if you buy SHLDQ stock, at the stock’s current price level any good news (which may or may not be forthcoming) could make the stock double or even triple. 

If the old Sears Holding company prevails on just 1 point in the bankruptcy case or litigation, stockholders could recover some of their losses, and people who speculatively bought the stock under $0.30 per share could make a nice profit. 

Unless you are fully aware of the consequences and the risk involved, you should probably avoid SHLDQ stock. On the other hand, if you have a certain amount of money earmarked for high risk, then buying a block of SHLDQ stock might be a worthwhile bet.   

Working to build up your stock portfolio? Check out Benzinga's guides on the best online stock brokers for beginners, how to invest in stocks, and how to make an investment strategy.

Frequently Asked Questions

Q

What happened to Sears holdings?

A

Sears Holdings filed for chapter 11 bankruptcy on October 15th, 2018.