Best Buy Co., Inc. (NYSE:BBY)

CAPS Rating: 1 out of 5

The Company is a specialty retailer of consumer electronics, home-office products, entertainment software, appliances and related services.


Player Avatar MrOneHundred (30.54) Submitted: 3/3/2013 3:16:43 PM : Underperform Start Price: $16.40 BBY Score: -99.51

It seems like every time I try to time a short term change in any stock, I'm always betting the downwards direction. (I guess that makes me a bear.) Along with certain trends I've noticed in the biotechnological and pharmaceutical markets, it seems fairly commonplace that a stock, after having spiked on a decent earnings call, continues to grow for awhile longer. With Best Buy I have a hard time seeing this continue much longer.

It's no small rumor on wall street: Many investors already know that Best Buy is entering dangerous lows due to a crumbling business model. There are simply way too many products offered by the business to attract any one group of customers looking for specialization in a certain product. Not to mention the amount of market share being stolen by competitors (most notably Amazon) which I think are executing sales in a successful manner. Given this qualitative bit, it seems likely that belated 2012 just missed losing a 4th major market brand. (The others being Eastman Kodak, THQ, and Hostess.)

There's always potential for a rally after a positive earnings, and many investors could see this as an opportunity to invest in a good brand name company as it seemingly begins to turn its business around. I, however, don't see the same optimism in this scenario. Shares have surged wildly in Thursday's and Friday's trading hours with two notable mild flash crashes. I'm sure arbitrageurs are having a field day with this stock! The call itself was based on a slightly trimmed loss, but the company itself is still projected to lose more money in the coming future.

According to the WSJ article below, "sales of smartphones have been unable to offset the revenue the company formerly reaped from sales of flat-screen TVs, whose prices and margins have eroded." Hear that? Best Buy is having a hard time selling smart phones even!

Fundamentals also aren't very bright here. Factor in unfavorable market conditions, and there you have it!

Hopefully this won't become another Netflix on my account. Man, what a pain to call that one wrong!

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