In the world of e-commerce and the Internet of Things, Best Buy Co Inc (NYSE:BBY) is an anomaly. Although the big-box retailer specializes in delivering cutting-edge technologies to consumers, Best Buy stock is fundamentally a brick-and-mortar investment. Under Amazon.com, Inc.’s (NASDAQ:AMZN) onerous weight, most physical retailers have struggled to gain traction at the registers and the markets.
Not so with Best Buy stock. Year-to-date, shares gained 39%. This compares favorably against big-box rivals Wal-Mart Stores Inc (NYSE:WMT), which is up 16%, and Target Corporation (NYSE:TGT), down 19%. More importantly, BBY has consistently avoided the Amazon curse by delivering profits for shareholders over the long run. For instance, the electronics retailer is up over 283% over the trailing five-year period. Neither Wal-Mart nor Target come anywhere close to that performance level.
What makes Best Buy stock tick? As InvestorPlace market strategist Anthony Mirhaydari argues, a good chunk of its success comes from gaming. Furthermore, Best Buy is the “only remaining national consumer electronics retailer.” Management has plenty of opportunities to leverage that advantage, and they have.
Moving forward, however, BBY stock needs a true upside catalyst. We can argue that much of the current profitability stems from painful, but necessary, divestures. However, cutting your way to success isn’t always a recipe for substantive success.
To that end, BBY is thinking gray to get some green.
Senior Monitoring Golden Opportunity for Best Buy
Senior monitoring is serious business. We’ve all seen the Life Alert commercials which feature the tagline, “Help, I’ve fallen and I can’t get up!” Many of our readers don’t think about such services because it doesn’t affect them directly. But sooner or later, senior monitoring is a concept everyone will focus on.
Life Alert claims on its website that over 400,000 lives have been saved through its emergency-alert products since 2008. Those statistics are not without some merit. According to the National Council on Aging, one in four Americans aged 65 or older suffers a fall. Over a one-year period, hospitals treat nearly 3 million injuries. Sadly, 27,000 incidents result in death. Clearly, senior monitoring is a sorely needed service.
To help bring this sector further into the mainstream, Best Buy corralled its technical know-how and is offering its own variant. For $29 a month and up, the retailer offers comprehensive senior monitoring. Sensors underneath the bed can record large movements, sending alerts to a caretaker. Cameras installed in the doorbell can identify invited guests, or would-be intruders.
Management hopes that this new service can sustain momentum for Best Buy stock. I don’t see a reason to doubt them. According to Bloomberg, in less than three years time, “45 million Americans will be caring for 117 million seniors.” In other words, senior monitoring isn’t just limited to a sole demographic. Financially, it cuts a broad swath — unless you don’t care about your parents.
Best Buy stock to be Lifted by Extraordinary Demographics
Nevertheless, the demographic data cannot be denied. Last year, between 74 million to just over 81 million “baby boomers” lived in the U.S. Compounding matters, near the end of 2011, Americans aged 65 and older became the largest population group. Every year for the next few decades, senior monitoring will become ever more crucial. This dynamic plays right into the hands of BBY stock.
Furthermore, the senior population’s expansion rate across various states is favorable to Best Buy stock. For instance, the western portion of our country experienced the fastest growth in the 65-and-older and 85-and-older demographics. The west, of course, includes powerhouse states like California, which is the sixth largest economy in the world. To put that into perspective, the California economy exceeded the fiscal output of France, India, and Italy.
Comparative statistics can often be swayed by volatile factors such as foreign-currency exchange. Still, it gives us an insight into the western region’s spending power. At Best Buy’s proposed $29 rate, the company’s senior-monitoring services is right on par with home-security services. For a modest monthly fee, BBY provides peace of mind for cherished family members.
By actively engaging the market for senior monitoring, Best Buy stock earned itself a ticket into the “feel-good” investment category. Through its network-integrated monitoring program, BBY conveniently and economically offers a critical service. Moreover, demand is virtually guaranteed to swing higher from here.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.