I’ve written previously about how the novel coronavirus is a death knell for many brick-and-mortar stores, and evidence bears that out. But if there’s one name that can prosper in the second half of 2020 and beyond it’s Best Buy (NYSE:BBY) stock.
True, Best Buy stock is down about 7% on a year-to-date basis. But that’s still an impressive mark considering the deep trough it suffered during the worst of the Covid-19 pandemic.
Since its low in March, BBY stock is up more than 50%.
That puts Best Buy in company with retailers like Walmart (NYSE:WMT) and Target (NYSE:TGT). Those big names have been able to largely recover — in terms of stock price — from the pandemic.
It’s the retailers still mired in the muck that you have to avoid like Nordstrom (NYSE:JWN) and Macy’s (NYSE:M).
What Sets Best Buy Stock Apart
Best Buy deals in high-end electronics, sound systems, gaming systems, computers, home office decor and appliances. Shoppers prefer to search in person for these products rather than online. Why? It’s nice to be able to test and listen to equipment.
That’s why Best Buy, with the concierge service that it adopted during the pandemic, has been able to stave off some of the bigger losses seen by other retailers. Best Buy adopted the service, in which customers made appointments and were met by a personal shopper to escort them through the store, at 700 of its 1,000 stores.
Best Buy CEO Corie Barry told Fortune that the concierge service has been a hit.
“What we’re seeing from customers is that they actually feel like they have more time to ask questions, and our associates, more importantly, are offering more fulsome solutions. They are focused on one customer’s needs. This leaves lots of room for more complex conversations.”
The personal service allows Best Buy to price its most popular items at a premium. UBS says that BBY’s best-selling products in 20 categories were priced 1.4% higher than Amazon (NASDAQ:AMZN) and 1.2% higher than Walmart.
Best Buy Earnings at a Glance
It’s the combination of concierge service and online sales that gave Best Buy a much-needed bump in the first quarter. Earnings show BBY stock brought in $8.56 billion in the first quarter, beating Wall Street’s estimates of $8.25 billion.
Earnings also beat estimates, coming it at 67 cents per share. Analysts had expected EPS of 41 cents.
True, earnings were down from the previous year, falling from $9.14 billion and $1.02 per share, but that was to be expected considering the Covid-19 shutdown. What’s more impressive is that Best Buy’s domestic online sales increased by 155% on a year-over-year basis to $3.34 billion.
Best Buy says it was able to retain 81% of its sales volume during the last six weeks of the first quarter, even as sales at U.S. electronics stores fell more than 61% in April, according to the U.S. Department of Commerce.
“The strong sales retention is a testament to the strength of our multi-channel capabilities and the strategic investments we have been making over the past several years,” Barry said.
Those earnings also allowed Best Buy to continue paying its quarterly dividend of 55 cents per share. That’s a healthy dividend in a time when many companies are cutting back.
The Bottom Line on BBY Stock
Fortunately, the coronavirus threat is fading — at least, for now — and states across the country are opening up again. Consumers are ready to spend and it appears that the U.S. recession may be short-lived after all.
With its online growth and the favorable response to its concierge service, Best Buy has set itself up to be one of the stronger retailers on the market headed into the second half of the year.
BBY stock is a buy in my Portfolio Grader, where it earns a B grade right now. And thanks to its reliable and growing dividend, it earns an A grade in my Dividend Grader. So, this stock offers a nice blend of dividends and growth.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
