Gutted Stocks to Buy – Bed Bath & Beyond (BBBY)
Right now, you can buy Bed Bath & Beyond (BBBY) for nearly the same valuation as Staples (SPLS), which is insane, considering how much better BBBY’s business is. BBBY’s enterprise value is 6.2 times EBITDA, compared to 4.8 for SPLS.
Bed Bath & Beyond has absolutely no debt, almost a billion dollars in cash and is still growing, albeit at a slower pace than in the past. In 2014, it expects mid-single-digit EPS growth which would mean delivering above $5 for the first time in its history. With BBBY stock sitting just above $60, we’re talking about a price-to-earnings ratio of 12, far less than many of its home furnishing peers.
In early January, I covered the aftermath of its Q3 earnings report. I came to the conclusion that BBBY stock was taking a breather and was even possibly headed for a bit of a decline. Since then, it’s down 13.3% which makes me think the worst is over. That doesn’t mean there won’t be any more bad news in the near future or further declines in its stock price … but it does suggest that BBBY is one of the better values available in retail at the moment. In terms of gutted stocks to buy, BBBY is one of the best options out there.
As of this writing, Will Ashworth did not own a position in any of the aforementioned securities.