Best Buy Company Inc (BBY)

Allan Tong’s Discover Picks Best Buy is trading only $6 lower than its average price target of $116. Even though the wind is at its back, it’s likely wise to wait for a pullback before entering or adding more. Existing shareholders have been rewarded with a 74.56% total one-year return at a 3.53% profit margin and a 17.35x PE. Read BBY Stock, HD Stock and CFP Stock: Top 3 Stocks for the Homebody Trend for our full analysis.

There is a pattern that could be called a Double Top, and from there it has been in a downtrend. You have lower highs and lower lows. Until the stock starts to consolidate, with no more lower highs or lower lows, and breaks past the last high and past the 200-day moving average, you are not in an uptrend.

(A Top Pick March 3/14. Up 41.1%.) A turnaround story. They were suffering a little bit from a competitive gap.

(Top Pick Mar 3/14, Up 64.50%) It is a turnaround story. They are comparable with any on-line retailer. This is a well run store and they match any price you might have on a comparable item.

(A Top Pick Feb 13/14. Up 58.2%.) They have really done a lot to change things. This was a turnaround story. Had a lot of handicap where people would shop online. Amazon started to introduce sales taxes by state, which reduced a lot of incentive. Also, they have been broadening out their line and have really turned it around. Has become more customer focused.

Retail does well From Jan to April except this year because of weather. Also, Oct, before Black Friday. There is some restructuring taking place. We are in a trading channel. He would not jump in right now.

This is a name that got pounded in the last little while, but it has already started to turn around.

Worst performer on the S&P thus far this year. This is a multiyear turnaround. It fell over 35% at the beginning of the year. Earnings were slightly disappointing. It leads in every single category that it has. They are turning around. They have the best price guarantee so a sales associate will match any price on Amazon. Amazon is starting to increase their rates in a way because they now have to charge sales tax in many of the states. There is a lot of low hanging fruit. They have to fix the website, fix customer experience a little bit, but if they can do that, they can selloff their Chinese affiliate which is worth hundreds of millions of dollars. Cheap and thinks it will be 30%-40% higher next year. Dividend yield of 2.67%.

With the great performance last year, it was an oversold stock and marginal expectations. They rationalized costs and continued to beat quarter over quarter. But he thinks the costs have been squeezed out of the business. If you see improvement of the bottom line next quarter you can get back in but right now it is in no man’s land.

Retail merchandising stocks tend to go higher at this time of year from September, right through until black Friday then the whole sector has a tendency to roll over because that is the peak of the good news for the sector. Chart shows this one had a nice run but is now showing resistance. Now is the time to take some money off the table.