Best Buy (BBY), Is it still a good buy
Best Buy missed the earning estimate this past quarter with 7.2% decline in entertainment software, DVD, and CDs, but offset by strong flat panel TVs and MP3 sales. The comp. store sales slightly below expectation and guided lower for the third quarter. The company also caution the impact of higher gas prices and deep discount by the automakers may take away some spending power by the consumer. The results of the release is a decline of more than 5.5pts in the stock and I anticipate further downside. Although stock maybe bearish in the short term, I’m still bullish on the long term. The company is implementing and converting its existing stores to what they called segmented stores with focus on 5 customer segments to create not only better experience for the customers, but employees as well. The idea is to translate happier employees lead to happier customers and lead to more sales. It has completed its first wave of implementation and conversion. The results are very promising because the comp gain on the converted stores experienced a 9% gain. The geek squad is also expand rapidly targeting stay at home moms and small/home based businesses. Overall I see bright future for Best Buy and its willingness to adapt to changing business condition to stay on top of its competitors. If you are a conservative investor, I suggest hold the stock and when stock drop to between 40 and 41 add some more shares. If you are aggressive and have the time to watch it closely. I suggest purchase short term put to capture some gain on the downside.
It's not when you buy. It's when you sell!
