Stock Option Advisory

Is BestBuy a Buy? – Argument For

Competition is good. It drives innovation and rewards superior effort. In the current tough economy however, lack of competition is better. Best Buy (BBY), the electronics retailer, has skills honed by competition, and now it also has the advantage of watching its strongest competitor go out of business.

Circuit City, a lagging specialty retailer, filed for Chapter 11 bankruptcy in November of 2008. The poor retail environment had decimated its sales, but it hoped to stay open and regroup. Inventory build-up probably doomed the company, as margins narrowed and consumers refused to buy. The retailer’s effort to stay afloat proved unsuccessful, and now it is liquidating its assets. On January 16th of this year, it announced it will go under.

See what the stock option experts are doing
Sign up now for PowerOptionsApplied 30-day risk free trial

The remaining direct competitors with Best Buy are relatively weak, and are not as focused in the space as Best Buy has learned to be. Electronics retailer Radio Shack (RSH) shares hit a fifteen year low recently when the company reported worse than expected results, mostly because of slow sales. GameStop (GME), which retails video games as well as selling entertainment software, has continued to produce good results, and is technically an electronics retailer, but is not really a direct competitor with Best Buy across most of its lines.

See what the stock option experts are doing
Sign up now for PowerOptionsApplied 30-day risk free trial

BBY has already tightened up its workforce. On February 12, about 500 headquarters employees who had accepted voluntary exit programs in December left the company. Best Buy plans to involuntarily lay off about 40 more, by paring 250 jobs and then offering rehires in new positions to about 210 of the people who lost their positions. It is slimming down for hard times.

Free stock option newsletter
» return goal > 2% / month
» works in any market

Best Buy is also retooling its stores. It is shifting store employees to be more directly useful to consumers, and it is not currently laying-off salespeople. The idea is to mass the employees where they count, interacting face-to-face with the customers. A better customer experience should equal more sales.

Want to protect your portfolio/401K from market downside?
yet still benefit from market upside
Sign up now for the free Sketch

The company’s online presence is substantial and growing. Its websites include the Best Buy sites for the U.S. and Canada; a Geek Squad site, for their installation and repair service; MagnoliaAV for audiophile equipment and service; Pacific Sales for kitchen and bath sales; and which integrates VoIP voice and data transmission for businesses. The company also owns more than 85% of Napster, the now legal file-sharing service for music downloading fans.

Learn how to profit from winner stocks
and protect yourself from loser stocks
Download free Trade Simulator now

Financially, BBY seems to be in very good shape. It has good growth, and good profitability with high quality revenues. It is not operating in a currently popular market sector, and that may be a concern, but its market share is certainly growing. Its price to cash flow and price to book mark it as an excellent value.

Learn to trade like the pros
Signup for free Webinars now

For investors or traders wanting to take a nibble at the retail sector Best Buy looks like a fine choice. It is doing well in hard times, and should rebound nicely when the market does. Meanwhile it seems a relatively safe bet, and so it earns a definite Buy.

Investors considering a stock investing position in Best Buy, but aren’t absolutely sure of it’s future should consider protecting a Best Buy investment with stock options. Purchasing a put option for Best Buy would protect a stock investing position in Best Buy from experiencing a loss. An investment in Best Buy can also be used to generate income by entering a covered call investing position. A covered call investing position can be entered by purchasing a stock and then selling a call option.

For more information about how to identify and research great option trades, visit the PowerOptions website. There you will find the data you need to make quick, clear, and informed decisions. You can trade knowing you have found the best investment. Also, PowerOptions will allow you, with a few quick clicks, to quickly and accurately compare trades. PowerOptions’ premium customer support is second to none in the industry. They can be easily contacted when you need them at their toll-free number to answer customer questions. Call them now toll free at 877-992-7971.

PowerOptions provides a free 14-day trial of its service. So join PowerOptions today, and you too can start reaping the benefits of the covered call investment strategy.

PowerOptions’ sister company PowerOptionsApplied provides expert stock option trading recommendations. PowerOptionsApplied specializes in covered calls, naked puts and iron condor stock options strategy recommendations. PowerOptionsApplied provides a 30-day risk free trial of its service.

[tags] Circuit City, Chapter 11, bankruptcy, Geek Squad, MagnoliaAV,, VoIP, Napster, BBY, Best Buy Co. Inc., GME, Gamestop Corp., RSH, RadioShack Corp. [/tags]

Leave a Reply

Your email address will not be published. Required fields are marked *