2-Star Stocks Poised to Plunge: Best Buy?
Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, electronics retailer Best Buy (NYS: BBY) has received a distressing two-star ranking.
With that in mind, let's take a closer look at Best Buy's business and see what CAPS investors are saying about the stock right now.
Best Buyfacts
Headquarters (Founded) | Richfield, Minn. (1966) |
Market Cap | $8.96 billion |
Industry | Computer and electronics retail |
Trailing-12-Month Revenue | $50.43 billion |
Management | CEO Brian Dunn (since 2009) |
Return on Equity (Average, Past 3 Years) | 20.6% |
Cash / Debt | $2.23 billion / $2.18 billion |
Dividend Yield | 2.5% |
Competitors | Amazon.com (NAS: AMZN) |
Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 15% of the 3,402 members who have rated Best Buy believe the stock will underperform the S&P 500 going forward. These bears include KeefyR and rjzii.
Just last month, KeefyR touched on the headwinds against the stock: "I used to go to Best Buy when I wanted to buy electronics. The last time I went, the sales people knew less about the equipment than I did. Now it's easier to buy online."
Over the past five years, in fact, Best Buy has grown its bottom line at a rate of only 5.3% annually. That's slower than that of rivals Amazon (44.6%), Apple (61.2%), and even Wal-Mart (9.7%).
CAPS member rjzii elaborates on the bear case:
Best Buy will become a victim of online sales. CD, DVD, and even blurays are on their way out as more people get availably to broadband, and begin to stream and download media. They charge more for almost everything in their showroom than [eBay] or Amazon does, this use to be because they had a knowable staff, but I feel this is also no longer the case. It is also hard to get impulse buys when most people have an app on their phones that will scan the barcode and give you the prices of all local and online competitors instantly. BB seems ... stuck in their ways.
What do you think about Best Buy, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!
Interested in another easy way to track Best Buy?Add it to your watchlist.
At the time thisarticle was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of Best Buy, Amazon, Apple, Wal-Mart, and eBay, as well as creating a bull call spread position in Apple and a diagonal call position in Wal-Mart. The Motley Fool owns shares of Best Buy, Apple, and Wal-Mart. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.
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