RadioShack Corporation (RSH), Best Buy Co., Inc. (BBY),, Inc. (AMZN): Don’t Be Fooled by the Electronics-Retail Turnaround

Moody’s also has a poor outlook on RadioShack. The corporate rating is down to Caa1. Moody’s notes “the overall business strategy of the company to reverse the decline in profitability has not gained any traction. Moody’s expects that the 2013 retail operating environment will remain challenging and the increasing price competition within the wireless- mobility sector, including wireless carriers, will continue to pressure RadioShack’s profits.”

Bottom line

Both of the electronics-retail stocks look incredibly cheap, with Best Buy trading at 0.3 times sales and RadioShack at 0.1 times. Compare this to, Inc. (NASDAQ:AMZN)’s 1.9 times. However, I think both of these retailers have too many headwinds, including a saturation in the smartphone market, which also happens to be a low-margin business for the retailers. Meanwhile, although the valuation appears expensive, I would not be betting against, Inc. (NASDAQ:AMZN), especially with Jeff Bezos at the helm.

The article Don’t Be Fooled by the Electronics-Retail Turnaround originally appeared on and is written by Marshall Hargrave.

Marshall Hargrave has no position in any stocks mentioned. The Motley Fool recommends The Motley Fool owns shares of and RadioShack. 

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