Best Buy Co Inc (NYSE:BBY) — This leading consumer electronics retailer operates about 2,000 stores in North America and China.
On May 2, the company reported better-than-expected Q1 revenue and earnings. Earnings per share of $0.37 beat the consensus forecast of $0.29. In addition, Best Buy strengthened its U.S. outlook.
Analysts at Credit Suisse Group AG (ADR) (NYSE:CS) appeared encouraged by Best Buy’s results. They have an “outperform” rating on BBY stock and a $45 price target. They expect better comps due to demand for large-screen ultra-HD TVs and improved market share in mobile and appliances. They also praised the company’s effective inventory management.
Plus, added customer initiatives with the company’s “Geek Squad” improves the opportunity for future growth.
S&P Capital IQ increased its EPS estimates for fiscal 2016 (ending in January) to $2.57, and its analysts look for earnings of $2.90 in fiscal 2017.
Technically, BBY stock is forming a double-bottom consolidation after retreating from a high at $42 in March. Strictly speaking, the stock is not in a bullish trend, but it is not in a long-term downtrend either. The consolidation is encouraging because of a recent buy signal from the MACD indicator and the solid long-term performance of BBY stock.
A spike in volume in May, as well as lower volume on down days, is also a positive sign.
Buy BBY stock under $34 with a trading target of $40 for a return of 18%. A stop-loss should be placed at $32.50 to limit risk in the event of a general decline in retail stocks. Investors can purchase BBY stock at the market with the intention of holding it long term.
