Could Best Buy go to $52 a Share?
Posted on Monday, March 24th, 2008 | In Stocks to WatchBarron’s is in love with Best Buy Co. (NYSE:BBY) this weekend and is speculating the largest U.S. consumer-electronics retailer may surge 23% to $52 in New York trading once investors overcome fears of how the company would fare in a recession
Here’s the lowdown from Reuters: 
Shares of Best Buy Co (BBY.N: Quote, Profile, Research), the largest U.S. consumer electronics retailer, look especially attractive for long-term investors, given expectations for increasing consumer appetites for video games, DVDs and televisions, Barron’s said in its March 24 edition.
Shares of the Richfield, Minnesota-based company closed Thursday at $42.41, down 21 percent from their 52-week high set in December.
But Barron’s said the shares are trading at about 12.5 times estimated fiscal 2009 earnings, below the normal 15 to 18 multiple, and about 6 times estimated 2009 cash flow per share, compared with a normal nine times cash flow.
Best Buy on February 15 trimmed its full-year profit forecast to a range of $3.05 to $3.10 per share from a range of $3.10 to $3.20. Yet Barron’s said several factors warrant optimism.
It said Best Buy should benefit from increased sales of higher-margin software for Sony Corp’s (SNE.N: Quote, Profile, Research) (6758.T: Quote, Profile, Research) PlayStation 3, Nintendo Co’s (7974.OS: Quote, Profile, Research) Wii and Microsoft Corp’s (MSFT.O: Quote, Profile, Research) Xbox 360.
The company should also benefit from the end of a format war over next-generation DVDs, where Sony’s Blu-ray format won over Toshiba Corp’s (6502.T: Quote, Profile, Research) HD DVD, Barron’s said.
In addition, Barron’s said Best Buy will see sales tied to a government-mandated conversion to a digital television standard next February.
Households without cable or satellite hook-ups will have to either buy digital televisions to keep receiving free over-the-air transmissions or buy converter boxes, Barron’s said.
SOURCES: Barrons, Reuters – Breaking News
Last 5 posts by Ted Gottsegen
- Bank of America reports Monday (10/20) - October 17th, 2008
- At what point do we become Russia? - September 10th, 2008
- Gold keeps going down along with Yamana (AUY) - September 3rd, 2008
- Sears Holdings (SHLD) 57% Short Interest and LL Cool J - August 19th, 2008
- Play the played out: Potash Corp (POT) - August 13th, 2008
 About Ted Gottsegen (http://thestockmasters.com)
Ted's investments in the stock market and real estate have allowed him to pursue his true calling in life, Music. Ted is now a full time musician thanks to his investments and a part-time StockMaster providing his knowledge of making the right decisions and trend spotting in the stock market. Ted is also an accomplished writer and provides his editing skills to all of the StockMaster publications. |
No recommendations, either expressed or implied, are being made to buy, sell, hold or short any of the mentioned stocks. No legal, tax or accounting advice is expressed or implied. Always contact your attorney, CPA, or tax advisor before acting on any legal or tax issues. StraightStocks.com is not responsible for the content, products, or services of any of the advertisers on this site. StraightStocks.com receives compensation from advertisers on this blog. Services and products referred to herein are trademarks, registered trademarks, servicemarks, and/or registered servicemarks of their respective trademark or servicemark owners.