Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Everybody Loves Best Buy Co., Inc. (BBY) Again

Page 1 of 2

Best Buy Co., Inc. (NYSE:BBY)‘s been sneaking its way back into the pack of market darlings. The consumer-electronics retailer is up 46% this year through yesterday’s close, currently trading at levels last seen in mid-October.

It’s not as if there’s been a wave of positive developments. Best Buy went on to post a disappointing fiscal third quarter, and analysts see a sharp decline in profitability when the chain posts its holiday-quarter results next week. The Wall Street Journal and Reuters also reported last week that disgruntled founder Richard Schulze may be moving away from an outright buyout of the company.

Best Buy Co., Inc. (NYSE:BBY)However, that didn’t stop analysts at Barclays Capital and Stifel Nicolaus from upgrading shares of Best Buy yesterday. They’re giving the retailer a pass in the near term as CEO Hubert Joly repositions the company. Instead of waiting for signs of stability, the analysts want to be ahead of the curve.

Yes, margins will be a mess in the near term. The decision made this week to price-match, Inc. (NASDAQ:AMZN) year-round after a trial holiday run is brazen. It will mean selling items at lower markups, and possibly even at a loss. However, Best Buy needs to restore its reputation as a source for competitively priced consumer electronics before it can begin to grow on the bottom line again.

The Wall Street pros are encouraged by the rise of Android at the expense of Apple Inc. (NASDAQ:AAPL), a sentiment that was voiced last month by BB&T Capital Markets analyst Anthony Chukumba. Best Buy sells Apple and Android devices, but Apple itself provides a slicker retail experience at its namesake stores for its gear. Android’s success gives Best Buy a shot at competing with non-Apple retailers.

Analysts are also holding out for a boom in smart technology to rekindle appliance sales, but it remains to be seen whether that will pan out for Best Buy. The 3-D TV revolution didn’t help. The holiday quarter’s debut of Windows 8 and Wii U couldn’t spare Best Buy from flat holiday sales as PC and video-game sales sputtered.

I remain skeptical, even though it’s now fashionable to warm up to Best Buy. There is little that Joly can do to compete with the prices from bare-boned e-tailers. The migration of media to digital solutions leaves Best Buy out in the cold there.

However, it’s certainly reasonable to see Best Buy’s sales improving in 2013 if the economy continues to bounce back, even as it loses market share to Amazon and digital content distributors. The retailer is also gaining traction with its @BestBuy_Deals Twitter feed with Amazon-like flash sales, closing in on 250,000 followers.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!