How To Trade Best Buy Stock

How To Trade Best Buy Stock
News

Shares of Best Buy (BBY) have been declining steadily since December 2010. A major issue for the electronics retailer is that buyers of TVs and other consumer electronics products come to the Best Buy’s stores to browse and then buy the products they like at lower prices from online retailers.

Best Buy stock is down 31.5% over the past 12 months with a five-year average return of -14.9%.

As a result of this terrible performance, the retailer has been trying to stop the bleeding by floating two ideas.

The first is to reduce the number of big-box stores and build new boutique stores similar to the Apple (AAPL) retail locations.

Analysts appear to dismiss this plan, because unlike Apple, Best Buy does not have its own proprietary products.

In addition, consumers of Apple products tend to line up and sleep out in front of Apple stores so that they can the first on their block to own the latest product release.

Back on May 21, Best Buy’s stock slumped to a multiyear low of $17.53. Then in late June there were reports that its founder Richard Schulze was considering putting together a plan to take the company private.

From a June 29 close at $20.96 the stock popped to $23.57 on July 2 as this prospect briefly was the topic of discussion.

My Web site ValuEngine rates Best Buy ($21.14) a BUY, with fair value at $37.45, which makes the stock 43.5% undervalued.

The ValuEngine one-year price target is $23.50. The daily chart for Best Buy shows declining momentum with the stock ending Tuesday above its 21-day and 50-day simple movingaverages at $20.32 and $19.91, respectively.

It’s also below its 200-day simple moving average at $23.70. My weekly value level is $20.46, my quarterly pivot is at $21.14 and my annual risky level is at $26.29.

This morning, Best Buy shares gapped lower at the open and hit $19.93. This was in sympathy with HHGregg (HGG), which plunged more than 20% at the open after announcing lower guidance.

Investors in Best Buy who had a good-’til-cancelled limit order to buy weakness at my $20.46 weekly value level would have been filled at the $19.93 opening price.

The Street

Share Tweet
React
Like Us On Facebook
Like Us On Facebook

Julian Sonny

From the sandy beaches of Hawaii, to the streets of New York: Julian has seen it all. His lifetime of travels has given him a broad scope of knowledge and an eclectic taste unlike any other in the tri-state area. Julian has often been compared to cultural icon, The Rock, because of his unequivocal work ethic and warrior-like stature.

More In News

Technology Liz Rowley

China Will Get The World’s Fastest Elevators That Will Send You 100 Floors In Under A Minute

A global contender in all things, China is about to one-up us all where it really counts. Get ready for the worlds fastest elevator, courtesy of multinational engineering and electronics conglomerate, Hitachi. Earlier this week, news surfaced that two of the world’s most rapidly-ascending elevators were part of the construction plans for a Finance Center […]

Also On Elite

Ladies

The Real Reason We’re All Clingy When It Comes To Relationships

Urban Dictionary defines “clingy” as: ”A boyfriend/girlfriend or possibly someone who likes you who becomes, let’s say, obsessed. Signs that your boyfriend/girlfriend is clingy: doesn’t stop calling, constantly tells you how much they love/like you, writes you songs, buys you flowers/chocolate so much it gets annoying, and wants to spend time with you… all the time.” […]