The only growing product categories at Best Buy Co., Inc. (NYSE:BBY) are smartphones and appliances. If mobile is so lucrative, why is RadioShack Corporation (NYSE:RSH) — a company that put all of its eggs into the wireless basket two years ago — losing so much money? Appliances are booming in popularity. It’s part of the real estate revival. However, if investors want in on that, isn’t it smarter to go for CONN’S, Inc. (NASDAQ:CONN) or hhgregg, Inc. (NYSE:HGG), where it’s a bigger part of their product mix? Appliances accounted for 43% of hhgregg’s sales this past quarter.
Best Buy Co., Inc. (NYSE:BBY) CEO Hubert Joly has done an admirable job of shaving costs and unloading the company’s problematic European business. Thinning gross profit margins prove that he’s carrying through on his goal to pass on the savings to consumers in an effort to compete against cheaper and nimbler online merchants. However, this all ultimately adds up to a business where things may get worse before they get better.
A 52-week high just doesn’t add up, and it’s a joke that reasonable investors just don’t get.
The article Best Buy Is Laughing at You originally appeared on Fool.com is written by Rick Munarriz.
Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends hhgregg and owns shares of RadioShack.
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