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.
|Headquarters (Founded)||Richfield, Minn. (1966)|
|Market Cap||$10.3 billion|
|Industry||Computer and electronics retail|
|Trailing-12-Month Revenue||$50.4 billion|
|Management||CEO Brian Dunn (since 2009)|
CFO James Muehlbauer (since 2008)
|Return on Equity (Average, Past 3 Years)||19.9%|
|Cash/Debt||$2.12 billion / $2.53 billion|
|Competitors||Amazon.com (NAS: AMZN) |
Apple (NAS: AAPL)
Wal-Mart (NYS: WMT)
Sources: S&P Capital IQ and Motley Fool CAPS.
Earlier this fall, pfountaine warned Fools about buying into Best Buy: "They seem to have completely lost their way regarding customer service. As online companies increase their ability to efficiently deliver products of this type, volume will slip, and profit will disappear."
Over the past year, in fact, Best Buy's top-line declined 0.5%. Meanwhile, rivals Amazon, Apple, and even Wal-Mart have posted revenue growth of 42%, 66%, and 5%, respectively.
CAPS member Louebsch expands on the underperform argument:
Best Buy doesn't sell anything that you can't buy off the internet for ... less. Unless someone has an immediate need for a DVD player or video game, there is no reason to go to this store. Even Target and [Wal-Mart] are carrying similar products at much lower prices. Until Best Buy figures out what it wants to be known best for, this stock is going to tank.
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At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Fool owns shares of Best Buy, Amazon, and Wal-Mart. Motley Fool newsletter services have recommended writing covered calls in Best Buy; buying shares of Amazon, Apple, and Wal-Mart; creating a bull call spread position in Apple; and creating a diagonal call position in 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.