hhgregg, Inc. (HGG), Best Buy Co., Inc. (BBY) & Microsoft Corporation (MSFT): Steer Away From These Companies Before It’s Too Late

What would be the impact of low software sales from Microsoft on Best Buy?

Going back to Best Buy Co., Inc. (NYSE:BBY), I believe that Best Buy’s benefits will be minimal from Microsoft Corporation (NASDAQ:MSFT) opening mini-stores inside its stores. On the other hand, I believe that the partnership with Samsung may be of great benefit to Best Buy. Its Galaxy phones directly compete against the Apple Inc. (NASDAQ:AAPL)’s iPhone. Its tablets took some market share from the iPad, and its laptops are another option to Hewlett-Packard Company (NYSE:HPQ)’s and Dell Inc. (NASDAQ:DELL)’s. Revenues from the Samsung mini-store should help Best Buy Co., Inc. (NYSE:BBY) in the long run.

However, overall, the investment prospectus of Best Buy does not seem ideal for growth portfolios at this point, and I would recommend avoiding this stock.

The final message

I believe investors must take their profits from hhgregg, Inc. (NYSE:HGG) and Best Buy Co., Inc. (NYSE:BBY) and look elsewhere. I agree the momentum in these companies is huge at the moment, but its financials do not look appealing.

hhgregg, Inc. (NYSE:HGG)’s sales are declining, and the retailer is trying to lessen the impact by opening new stores. However, the strategy has not worked lately, and only one new store was open in the last six months. Also, its same-store sales are declining way beyond the company’s guidance for 2013. A lower-revised guidance will send the stock south, and investors should not be there when that moment occurs.

Best Buy is trying to expand its revenues by forming alliances with Samsung and Microsoft. Although I believe that Samsung may prove to be an excellent companion, I have my doubts regarding Microsoft Corporation (NASDAQ:MSFT).

The software giant has not been able to capitalize revenues from its software section, and it is relying heavily in the launch of the Xbox One. For this reason, I do not believe that Best Buy Co., Inc. (NYSE:BBY) will benefit by opening Microsoft mini-stores significantly. In brief, investors should steer away from these two retailers for the time being.

Robinson Roacho has no position in any stocks mentioned. The Motley Fool recommends hhgregg, Inc. (NYSE:HGG) (NYSE:HGG). The Motley Fool owns shares of Microsoft Corporation (NASDAQ:MSFT).

The article Steer Away From These Companies Before It’s Too Late originally appeared on Fool.com.

Robinson is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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