Category Archives: BBY

Best Buy 10-Year Targets

Below are the valuation targets for Best Buy (BBY) for the next 10 years. Continue reading

Best Buy’s New Normal

On January 17, 2014, we posted Edson Gould’s Speed Resistance Lines for Best Buy (BBY) in an attempt to determine what the extent of the decline might be.  From that posting we said the following:

“Best Buy has had a history of resting [at] the extreme downside target, currently at $14.78.  However, we have split the difference and placed an intermediate downside support level of $22.34.  Again, this is not a recommendation to buy or sell Best Buy, instead, it is an attempt to observe how closely the stock will adhere to the SRLs indicated in the chart.”

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Nearly one year later, we can see that although the historical trend had been for BBY to decline to the extreme downside target ( at $14.78), the estimate of $22.34 was a fair assessment of downside risk as the stock has managed to vacillate at or above the ascending $22.34 level seen below.

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The quality of Gould’s SRL has been fairly consistent and reasonably accurate.  We look forward to introducing additional SRLs of stocks that have established a declining trend to determine downside targets.  The conservative upside target for BBY is $44.85.

One Year Ago – Best Buy (BBY) At The Low

It wasn't long ago when Best Buy (BBY) was believed to be on its way out and join forces with the likes of Circuit City.  That was roughly one year ago after the company reported dismal earnings as well as a -4% decline in same store sales (found here) which took the stock down -13% in a single day!  Who would have imagined that such an event would be marked as the most opportune time to buy the stock.

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Since then, the stock has risen from $12 to the most peak at $44.  That equates to +265% gain in just one year.  While hindsight is 20/20, it's always good to look back at the sentiment when the stock make a new low.  This Forbes' article provides a great deal of insight into analyst sentiment.  According to Factset, 4% of of the analysts rated the stock as a "buy" or "outperform" at the low.  That number have risen to 58% today.

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In addition to having a strong heart and being a true believer in the company's turnaround plan, one would need just a tiny bit of luck to capture the stock at the low.  Our observations, however, has shown that any stocks worth investing should be accumulated at or near the low.