Best Buy: Your Turnaround Trade?

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Aug. 16 (Bloomberg) – In today’s “Three Vs.Trish,” Telsey Advisory Group Managing Director Joe Feldman, Trading Advantage Senior Market Strategist Scott Bauer and Bloomberg’s Alix Steel discuss Best Buy and their strategy for boosting sales with Trish Regan on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

A turnaround stock?

You either love or hate this stock.

That is what i have learned.

No one is expecting quarterly results to matter.

It will be about the holiday season.

The company has suffered three straight quarters of net losses and falling same-store sales.

We have major cost-cutting going on.

Opening stores within stores.

Price matching to get people to buy in the stores and not just window shop.

The big problem is margin pressure and cash flow issues.

Will increase sales be enough to offset the lack of margins?

They figured out how to compete.

Now they need to figure out how to make cash.

Can they figure that out?

How will they make money?

I think they will figure it out.

As trends stabilize, they are doing things on the service side to drive profits.

Their cash yield is among the best.

Despite the pressures, they have among the best cash flow generation.

Are you satisfied with their online strategy?

We do not want them to just the warehouse for amazon.

Absolutely not.

The prices are at parity with amazon.

In states where you have seen tax collection like california and new york on online goods, best buy has been competing very effectively.

What are you looking at for a trade?

This has had an incredible run for all the reasons you said.

It is time to take a little off the table.

They will come out with their numbers.

I think you will see margins are still compressed.

Competition is bigger and better than ever.

I would sell the august weekly sell for 80 cents.

Right now the stock is trading 30.5. this could rally by next friday and i would still break-even.

Anything under $32, i collect the entire 80 cent premium.

Good idea.

This text has been automatically generated. It may not be 100% accurate.


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