What’s Next After a 6% Rise in Best Buy’s Stock?

by Trefis Team
Best Buy
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Best Buy’s stock (NYSE: BBY), a specialty retailer of consumer electronics, home-office products, entertainment software, appliances, and related services, has increased 6% over the last five trading days (one week) and currently stands at around $115. It should be noted that the broader S&P500 returned a 4% growth during the same period. Now, is BBY stock poised to grow further? We believe the company remains fundamentally undervalued and there could be room for gains in the stock going forward. Specifically, there is a 60% chance of a rise for BBY stock over the next month (twenty-one trading days) based on our machine learning analysis of trends in the stock price over the last ten years. See our analysis on BBY Stock Chances of Rise for more details.

The strong housing market inspired consumers to invest in technology and appliances. In fact, Best Buy’s fiscal first-quarter results surprised many on Wall Street. The electronics retailer saw revenues spike 37% year-over-year (y-o-y) to $11.6 billion. While this selling period compared to a depressing prior year that included some of the most intense retailing lockdowns of the pandemic, the recent Q1 results also smashed results from the same period in 2019, which saw sales grow to $9.1 billion. But a truly scorching growth came in Best Buy’s comparable sales metrics – which jumped 37.2% rather than growing 17.1% for the quarter as the market expected. The company said it had sales growth across almost all categories, with the largest gains in home theater, computing, and appliances. This growth is expected to continue into the second quarter as well.

Calculation of ‘Event Probability’ and ‘Chance of Rise’ using last 10 year data

[1] 5.9% or higher return during five-day period in 275 times out of 2517; Stock rose in the next 5 days in 137 of these 275 instances

[2] 3.2% or higher return during ten-day period in 946 times out of 2517; Stock rose in the next 10 days in 527 of these 946 instances

[3] 3.1% or higher return during twenty-one-day period in 1116 times out of 2516; Stock rose in the next 21 days in 671 of these 1116 instances

E-commerce is eating into retail sales, but this might be an investment opportunity. See our theme on E-commerce Stocks for a diverse list of companies that stand to benefit from the big shift.

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