#2: Best Buy
Best Buy (BBY) is hardly the sexiest stock on Wall Street, with its embattled big-box store locations suffering amid e-commerce competition. However, though sales have mostly flat-lined since 2010, Best Buy has managed to stage a pretty substantial turnaround by slashing costs to offset shrinking profit margins.
In fact, Best Buy might close out this fiscal year with its first annual profit since 2011, and is forecast to then grow earnings a modest 8% again next year.
This turnaround coupled with buyout chatter early in the year, when founder Richard Schulze made some noise about taking his undervalued company private, helped Best Buy stock log a 100% gain by springtime.
This coupled with a broad-based rally for the stock market and short sellers admitting defeat, and it has been off to the races for Best Buy.
So will Best Buy keep things up? Maybe … as mentioned, earnings are improving and the bears have given up the fight against this stock.
However, revenue remains stagnant and the stock seems to have optimism priced in with a forward price-to-earnings ratio of more than 14. On some level, it appears that the biggest gains have already been made for Best Buy investors and it might be prudent to trim back.