Is Best Buy a Good Buy or a Goodbye?

With shares of Best Buy (NYSE:BBY) trading at around $11.67, is BBY an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

Imagine being trapped in the backwoods by a forest fire. There’s nothing you can do to stop this fire from spreading. You’re only hope for rescue (see Richard Schulze) is dimming. You could have been rescued earlier, but you let the opportunity slip away. Now you’re famished and praying for a miracle. If you haven’t owned Best Buy’s stock recently, you now have an idea of what it has felt like.

It is often said that a picture speaks a thousand words. While this statement is a bit of an exaggeration, looking at Best Buy’s max chart tells the typical rise and fall story. If you’re buying now, then you’re likely buying purely on hope. We will look at several troubling indicators, but perhaps what is most important is that this stock has performed poorly in a strong market. This is never a good sign. Of course, the major issue is having to compete with the likes of Amazon (NASDAQ:AMZN) and Wal-Mart (NYSE:WMT). To give you some perspective of this lofty task, if this were a football game, Best Buy would be a 50-point underdog in either matchup.

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For Best Buy, same-store sales have dropped for eight consecutive quarters, their profit margin is now in negative territory, and the days of people rushing to buy flat-screen TVs are over. However, amazingly, it’s not all bad news for Best Buy. Don’t get too excited, though. Most of it is still bad news.