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Started By
Message
Best Buy (BBY)
Posted on 4/4/12 at 7:15 am
Posted on 4/4/12 at 7:15 am
Recent losses reported and stock has been hammered a bit. May be time to go long. There seems to be a lot of short interest in the stock right now, but:
- Trading near a 7-8 year low
- Relatively little debt
- 2.7% div yield while you wait
- Forward P/E = 6.4
I don’t see the Best Buy big box stores going away anytime soon. Seems like they have a slot between WalMart and other specialty stores. Online shopping continues to grow, but I think most folks still want to touch/feel new electronic purchases.
Of course, the other view is that BBY will go the way of Circuit City, Borders, etc and give up the ghost!
Thoughts? Maybe too soon?
- Trading near a 7-8 year low
- Relatively little debt
- 2.7% div yield while you wait
- Forward P/E = 6.4
I don’t see the Best Buy big box stores going away anytime soon. Seems like they have a slot between WalMart and other specialty stores. Online shopping continues to grow, but I think most folks still want to touch/feel new electronic purchases.
Of course, the other view is that BBY will go the way of Circuit City, Borders, etc and give up the ghost!
Thoughts? Maybe too soon?
This post was edited on 4/4/12 at 11:01 am
11
Posted on 4/4/12 at 7:27 am to K E V 8 4
quote:
I don’t see the Best Buy big box stores going away anytime soon.
Read the news lately?
Posted on 4/4/12 at 7:35 am to I Love Bama
Uhhh....yeah....maybe you missed the premise/question here: Is BBY going to go UP or DOWN? I'm thinking of betting "UP", but am interested in others' views. Anything more substantive to contribute? 
Posted on 4/4/12 at 7:39 am to K E V 8 4
quote:
Anything more substantive to contribute?
He was referring to BBY closing a significant number of stores across the country. They are losing out to online stores and walmart.
Posted on 4/4/12 at 7:52 am to C
Best Buy just closed 50 stores.
My builder has a corporate contract with Best Buy, I had a 5,000 allowance through Best Buy. My wife wanted Bosch SS appliances, bill with builders discount was 11k.
ajmadison.com was just under 6k
Other than Walmart, Target, Sams, Costco, Home Depot & Lowe's, big box stores are going the way of the dinosaur IMO
My builder has a corporate contract with Best Buy, I had a 5,000 allowance through Best Buy. My wife wanted Bosch SS appliances, bill with builders discount was 11k.
ajmadison.com was just under 6k
Other than Walmart, Target, Sams, Costco, Home Depot & Lowe's, big box stores are going the way of the dinosaur IMO
Posted on 4/4/12 at 8:01 am to ItNeverRains
Best buy will be gone by 2020 IMO.
Wal Mart, Target, lowes and home depot though I think will always be around. They aren't the same as best buy.
Wal Mart, Target, lowes and home depot though I think will always be around. They aren't the same as best buy.
Posted on 4/4/12 at 8:14 am to K E V 8 4
quote:
Online shopping continues to grow, but I think most folks still want to touch/feel new electronic purchases.
Yeah, but unless BB starts charging admission helping other online merchants sell stuff is a bad business model. The only time I've bought stuff from Best Buy in the last 5 years has been when I had an immediate need for it or they had a competitive price. I just can't see me ever buying anything over $50 there again unless it was truly a good deal which they can't afford to do very often with their overhead vs. online merchants.
I don't know who is going to fulfill our need to touch stuff before buying it, but I don't think BB is a good long term bet.
Posted on 4/4/12 at 8:22 am to K E V 8 4
quote:
Of course, the other view is that BBY will go the way of Circuit City, Barnes & Noble, etc and give up the ghost!
If I was a betting man, that would be my stance. I mean where do you see growth? They have lost a ton of market share and half of their competitors are out of business already. Also they are no where near as cheap as amazon or other online retailers. Their massive overhead costs will be their downfall. Just like all of these other big box stores.
ETA: I also think we will see a development of small businesses fill the void of BB in the being able to touch the stuff before you buy category. A small business can keep overhead relatively low and can seek markets that are known to be profitable, while not being too big and expanding their reach too far like BB has.
This post was edited on 4/4/12 at 8:25 am
Posted on 4/4/12 at 8:40 am to reb13
I certainly appreciate the early thoughts on this. Thought I'd find at least one other like-thinking individual to support my case! Haven't pulled the trigger yet, though. 
There is a recent Credit Suisse report with an "outperform" assessment (I know...I know). They cite the following upsides:
- Over a 20% free cash flow yield
- cutting out $800 million in costs
- gaining share in mobile and appliances,
- significant value in Best Buy’s service model
- potential for margin/price stabilization due to (1)potential resolution of online sales taxes, which historically has been a key incentive for consumers to spend online. (2)unilateral pricing policies by key TV suppliers, which could limit the price competitiveness of online retailers. BBY
stands to benefit as over 80% of its online TV sales are actually picked up in stores
Last call for any views on long position.....
There is a recent Credit Suisse report with an "outperform" assessment (I know...I know). They cite the following upsides:
- Over a 20% free cash flow yield
- cutting out $800 million in costs
- gaining share in mobile and appliances,
- significant value in Best Buy’s service model
- potential for margin/price stabilization due to (1)potential resolution of online sales taxes, which historically has been a key incentive for consumers to spend online. (2)unilateral pricing policies by key TV suppliers, which could limit the price competitiveness of online retailers. BBY
stands to benefit as over 80% of its online TV sales are actually picked up in stores
Last call for any views on long position.....
Posted on 4/4/12 at 8:46 am to K E V 8 4
It's probably not a bad play.
I'm long in Radio Shack for some of the similar reasons.
I am a value investor so I would see some upside to going long. I would probably let it fall for a month or two longer, but then again, timing the market is a fools game.
I'm long in Radio Shack for some of the similar reasons.
I am a value investor so I would see some upside to going long. I would probably let it fall for a month or two longer, but then again, timing the market is a fools game.
Posted on 4/4/12 at 9:17 am to K E V 8 4
They are Amazon's showroom. Any potential upside is completely decimated by the fact that they will never have less overhead than online retailers.
Posted on 4/4/12 at 9:32 am to Projectpat
They are just Barnes & Noble part II.
Amazon will weaken them, Wal Mart will kill them.
Amazon will weaken them, Wal Mart will kill them.
Posted on 4/4/12 at 9:48 am to TheHiddenFlask
BBY has good brand equity, some pricing power, and decent margins for a retailer. They are refocusing their businesses and opening up smaller more neighborhood stores. But I dont see any catalyst for growth. I need a catalyst to be in a stock. I only see margin compression from here
Posted on 4/4/12 at 9:57 am to greenhead11
quote:
But I dont see any catalyst for growth. I need a catalyst to be in a stock. I only see margin compression from here
Exactly, now if I could invest in solely the Best Buy mobile division I definitely would.
Posted on 4/4/12 at 10:07 am to K E V 8 4
quote:
Barnes & Noble
Still in business. Maybe you mean Borders.
Posted on 4/4/12 at 10:48 am to Quidam65
They've been on the takeover rumor mill for like 2 years, its only a matter of time.
Posted on 4/4/12 at 10:50 am to reb13
If your interested and playing cellphone sales look to emerging markets. As more people transition from the lower to middle-class and make more, cell phone use will continue to grow exponentially! NOK IMO is a direct play on emerging markets cell phones.
Posted on 4/4/12 at 11:01 am to Quidam65
quote:
Still in business. Maybe you mean Borders.
You are correct - edited to correct. Thanks.
Posted on 4/4/12 at 11:46 am to K E V 8 4
Best Buy is largely mortgaging their future in the arena of cellular devices. They are hammering out costly contracts to carry phones for all the major providers.
If you think this is a viable business model, buy and hold.
I think this is a turrible idea and I think the shorters are on the winning side of this stock.
If you think this is a viable business model, buy and hold.
I think this is a turrible idea and I think the shorters are on the winning side of this stock.
Posted on 4/4/12 at 1:18 pm to BigBoyTiger
quote:
Radio Shack
still around, not sure how
This post was edited on 4/4/12 at 1:25 pm
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