One of the retail industry’s most resilient and impressive players is consumer electronics retailer Best Buy (NYSE:BBY). But, even Best Buy stock hasn’t been spared from the recent retail carnage.

While the SPDR S&P Retail ETF (NYSEARCA:XRT) has dropped more than 10% over the past four months, Best Buy stock has slid right alongside it, falling more than 20% during that same stretch.

To be sure, the drop in Best Buy is warranted. The U.S. economy is starting to cool off, and further rate hikes promise to keep growth below previous highs.

Meanwhile, Best Buy’s growth is doubly cooling thanks to tough laps, and margins are starting to show signs of maxing out, too. Overall, the narrative at Best Buy, while still good, isn’t great anymore.

When it was trading at $80 in September, Best Buy stock needed great to head higher. But, now that it’s trading at just $65 in late November, Best Buy stock doesn’t need great anymore. It simply needs good, and good is exactly what will happen over the next several quarters.

Moreover, it looks like Best Buy had a pretty good start to the 2018 holiday season, and this good start is the exact sort of catalyst this stock needs to turn things around.

Overall, Best Buy looks pretty tasty on this dip. The stock is slightly undervalued, the growth drivers remain healthy, and broader market sentiment is improving.

That is a winning combination for a bounce-back rally in Best Buy stock over the next several weeks to months.

Best Buy Long-Term Fundamentals Are Healthy

The turnaround story at Best Buy is quite impressive. A few years back, everyone wrote this company off as dead as peers like Radio Shack and Circuit City were filing for bankruptcy. The consensus thesis was that Amazon (NASDAQ:AMZN) was going to kill the entire consumer electronics space, and that Best Buy would eventually head for the exits.

That never happened. Instead, Best Buy reinvented itself as a omni-channel retailer which provided necessary in-store product insights and competitive prices and convenience.

These operational improvements helped reinvigorate traffic and sales trends. Those trends were additionally boosted by the mainstream emergence of IoT and AR/VR technologies, which introduced new products like smartwatches, streaming players, smart TVs, and next-gen gaming consoles, the sum of which increased overall consumer electronics demand.

Consequently, whereas Best Buy was left for dead at the beginning of the decade, this company is now one of the strongest retailers out there as we approach the end of the decade.

In fiscal 2018, comparable sales rose 5.6%. That strength has continued in fiscal 2019, with comps running around 4-7% year-to-date and expectased to finish the year at 4.5%. Meanwhile, amid this renewed top-line strength, margins are largely stable, and that has helped power healthy profit growth.

Yet, investors increasingly are concerned that Best Buy’s golden era is coming to a close. They cite slowing comparable sales growth and maxed out margins as evidence that growth may have peaked at Best Buy.

This is a true and accurate assessment. Comparable sales growth in excess of 5% wasn’t sustainable and comps will go lower as the laps get tougher. Meanwhile, margins really don’t have much more room to run higher from here.

But Best Buy will remain a healthy growth company with stable margins going forward due to still-increasing innovation and demand in the consumer electronics space. Healthy growth isn’t priced in at 12X forward earnings, giving the stock upside potential with the right catalyst.

Best Buy Had a Strong Black Friday Showing

The right catalyst for Best Buy stock could be strong holiday sales.

Last year, as the Street grew increasingly bullish on Best Buy’s holiday sales, the stock went from ~$60 at the end of November, to ~$70 by the end of the year. We could get a similar rally this year, considering the valuation on Best Buy stock is presently very similar to where it was at this time last year (roughly 16X trailing earnings and 0.4X trailing sales).

This bull thesis, of course, rests on the assumption that Best Buy has another strong holiday season. Early signs indicate that this will be the case. Data from Placer.ai, an analytics company which tracks foot traffic across tens of millions of mobile devices, reports that Best Buy’s Black Friday traffic increased 18% year-over-year, versus an average 14% gain across the entire retail sector.

Also, web traffic analytics site Alexa shows that web traffic trends for Bestbuy.com are spiking in late November in the same manner they did last year. Moreover, it appears the top gifts on Black Friday were essentially all consumer electronics related. That’s a bullish read for Best Buy.

Overall, it looks like Best Buy had a really strong start to the holiday season. If this strength persists, the Street should become increasingly bullish on Best Buy’s holiday sales as we get closer to the end of the year. Last year, this increasing optimism lifted Best Buy stock nearly 15% in December. We could get a similar rally this year.

Bottom Line on Best Buy Stock

Best Buy is a top-notch retailer with a sizable moat, secular growth trends, and stable margins. Right now, those winning qualities are being overlooked by a market worried about a looming recession.

Nonetheless, we could see market sentiment reverse course sharply in December as the Street becomes increasingly bullish about Best Buy’s holiday sales. This sentiment reversal could spark a healthy end-of-year rally in Best Buy stock.

As of this writing, Luke Lango was long BBY and AMZN.