Monday, March 05, 2012

Best Buy (BBY) 2012 Review


Best Buy Company BBY)sells consumer electronics, personal computers, software and appliances through 1564 stores in the US and Canada and 2430 in Europe.

The company has grown profits 16% over the last 10 years and its annual dividend from $.27 in 2003 to an expected $.62 in 2011. It has earned a return on equity 20%+ since 2002. BBY stumbled a bit in 2008 as the economy softened. However, it has bounced back since then and should continue to grow as a result of:

(1) the company’s broad product line, locally tailored store format and brand marketing strategy provides an edge over competitors,

(2) direct sourcing to the manufacturers allows it to lower product costs and achieve supply chain efficiencies,

(3) an ongoing stock buy back program.

Negatives:

(1) intense competition,

(2) its consumers are sensitive to the economic environment.

BBY is rated A by Value Line, has a 22% debt to equity ratio and its stock yields 2.5%.

Statistical Summary

Stock Yield Dividend Growth Rate Payout Ratio # Increases Since 2002
BBY 2.5% 6% 20% 7
IND 1.0 10* 14 NA


Debt/Equity ROE EPS Down Since 2002 Net Margin Value Line Rating
BBY 22% 20% 1 3% A
IND 39 15 NA 4 NA

*most companies in BBY industry do not pay a dividend

Chart

Note: BBY stock made good initial progress off its November 2008 low, quickly surpassing the November 2008 trading high (green line) but never successfully challenging the down trend off its December 2007 high (straight red line). Long term, BBY is in an up trend; the blue line is the lower boundary. Intermediate term, it is in a trading range (purple lines). Short term, it is a down trend (brown line). The wiggly red line is the 50 day moving average. The Aggressive Growth Portfolio does not own BBY. The upper boundary of its Buy Value Range is $21; the lower boundary of its Sell Half Range is $67.



http://finance.yahoo.com/q?s=BBY


Steve Cook received his education in investments from Harvard, where he earned an MBA, New York University, where he did post graduate work in economics and financial analysis and the CFA Institute, where he earned the Chartered Financial Analysts designation in 1973. His 40 years of investment experience includes institutional portfolio management at Scudder, Stevens and Clark and Bear Stearns. Steve's goal at Strategic Stock Investments is to help other investors build wealth and benefit from the investing lessons he learned the hard way.