Best Buy Co Inc (NYSE:BBY) is the largest electronics retailer in the U.S., but in recent years, it has taken on a larger reputation in the big box retail business — BBY stock is a survivor of the online onslaught brick-and-mortar retailers have undergone as Amazon.com, Inc. (NASDAQ:AMZN) and others have come gunning for market share.
Just five years ago, BBY stock was looking like a goner. It was a harbinger of the troubles we could see befall retail titans like Sears Holdings Corp (NASDAQ:SHLD), Target Corporation (NYSE:TGT), J C Penney Company Inc (NYSE:JCP) and others.
Its stores weren’t consumer friendly and their layout was tired. Prices weren’t compelling enough to bring people in and there were plenty of online options for cheap electronics.
Plus, the rise of digital music meant entire sections of the stores that were dedicated to CDs and traditional stereo equipment were now simply vestigial outgrowths with little purpose.
Simply put, moving into 2013, BBY stock was in deep trouble.
How BBY Stock Made a Comeback
A new CEO and game plan was instituted and things started to turn around. At this point, Best Buy stock is up 357% in the past 5 years. And year- to-date, the stock is up 40%. That’s pretty impressive for a company valued at nearly $18 billion.
What’s more, even after all this growth, BBY stock is still delivering a respectable 2.3% dividend.
Granted Q3 numbers that came out in mid-November were not inspiring, but they weren’t upsetting, either. Same store sales growth of 4.4% may have missed analysts estimates as did earnings, but they were still strong. Few retailers are seeing that kind of same store sales growth and since BBY is pretty much the last big box electronics retailer standing, there’s not much to compare it to.
Best Buy also raised guidance for Q4, but only to about breakeven year-over-year, so that didn’t get analysts in the mood to buy either.
BBY has explained that part of its Q3 challenges were the late release of the iPhone 8 and more importantly, the iPhone X.
That may be why after Best Buy stock slid after earnings, it’s up 8% in the past month, straddling the performance before and after its earnings announcement.
Bottom Line on Best Buy Stock
While bears talk of new competition from the likes of JCP or Home Depot Inc (NYSE:HD) and Lowe’s Companies, Inc. (NYSE:LOW), as well as online sales, the fact is, BBY has done a very good job upping its online game and using its stores as distribution centers and same-day pick-up locations.
It’s ability to adapt and remain vital in this turbulent time is a testament to its adaptability. And that’s a highly valuable trait in the current retail space.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.