What can you say about Best Buy (BBY)? Revenue is stuck and the company has few growth prospects ahead in an era of low-margin electronics, e-commerce competition and digital content upending the need for in-store DVD and CD sales.
This is decidedly not a growth story. But at the beginning of the year, a steady drumbeat of chatter about Richard Schulze taking his company private boosted optimism of a buyout premium for shares. The shorts were squeezed out, investors started to wonder if BBY wasn’t as bad as it seemed, and it has been off to the races since Christmas.
But don’t be fooled — the big Best Buy run coincides with the calendar and masks long-term issues. Shares are roughly back to 2012 highs but down almost 30% from 2011 highs and down 45% from 2010 highs. The company may have bounced back, but it will have a hard time moving higher unless the narrative of a sluggish top line changes.