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Following Your Gut: Is Now the Right Time to Buy Best Buy Stock?



Key Points
Best Buy shares have been beaten down enough this year, but there is hope in the numbers.
A clear sector outlier shows you why its current valuation is unjustified, so take advantage.
Insiders and analysts are all over this stock, hoping that the near future will bring double-digit rallies.
5 stocks we like better than DICK’S Sporting Goods
Sometimes, buying the dip on a stock can turn into trying to catch a falling knife, and the consequences may be more expensive than a hospital visit and a few stitches. However, there are times when being a contrarian and buying the dip on the right stock can do wonders for your wealth-creation journey.
Today, the consumer discretionary sector has offered investors tons of bullish momentum, as the Consumer Discretionary Select Sector SPDR Fund NYSEARCA: XLY has beaten the broader S&P 500 by as much as 11.3% on a year-to-date basis. However, one name has yet to receive its fair share.
Best Buy Co. Inc. NYSE: BBY has been disregarded by the market as it is perceived to be losing market share to retail giants like Amazon.com Inc. NASDAQ: AMZN. Management is aware of this, and so are analysts, which is why today’s perception is as important as it has ever been.
Right levels
When looking at Best Buy’s stock chart, you can immediately notice how the recent downturns have thrown it into the “golden ratio” of Fibonacci levels. Being within the 68% to 72% retracement and surpassing this level could imply that the stock is approaching an interesting demand zone.As most savvy investors know, technical analysis is only the beginning for the long hours ahead for picking the right stock. We’ve done the homework, so learn why Best Buy may be your best pick this quarter.
Beginning with price action, you know the sector is in a full bull market. However, Best Buy stock is showing symptoms of a bear market. As defined by Wall Street as a 20% or larger discount from recent highs, it fits the description.
Best Buy stock is trading at 73% of its 52-week high prices, whereas competitors like Deckers Outdoor Corp. NYSE: DECK and DICK’s Sporting Goods Inc. NYSE: DKS trade at much more favored rates of 99% and 81%, respectively. However, this is only the beginning.
Despite a disappointing sales figure in their latest quarterly financial results, Best Buy management pointed to increasing profitability and more streamlined operations. That’s what you should be hoping to hear from this company.
Because Best Buy is still ramping up its online sales segment, keeping costs under control while reinventing its business model is critical, so increasing operating margins should be music to your ears. Moreover, sales have also declined for competitors, so don’t worry.
They don’t want you to know
Beating down the stock is a classic big-money strategy: scare away the retail investors so that they can pick up cheap shares and then pump out the good media surrounding the business. In the case of Best Buy, the market knows something you don’t.

Because earnings will grow past the industry average, and the quality of these earnings is increasing due to management efforts to restructure costs, markets should be willing to pay a higher premium for the stock, right?
Because most of the market, as you now know, has been scared off with bearish price action, only insiders are willing to commit capital to this cheap valuation. And when insiders put their money where their mouth is, you bet something big is cooking.
Management has repurchased $270 million worth of stock in 2023, representing nearly 2% of the company’s market capitalization, not a statistic you’d want to pay attention to.
As it turns out, Invesco NYSE: IVZ, which happens to be Best Buy’s largest shareholder, has upped its position by as much as 8.7% in November of 2023. Considering the current stock levels, it seems to be an extremely well-timed purchase.
These insider purchases have given analysts enough confidence to place a $77.9 share price target on Best Buy, calling for a 15.2% rally from today’s prices to meet it. The outlook for management strategy is holding up on the positive end of things. Before you consider DICK’S Sporting Goods, you’ll want to hear this.MarketBeat keeps track of Wall Street’s top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on… and DICK’S Sporting Goods wasn’t on the list.While DICK’S Sporting Goods currently has a “Hold” rating among analysts, top-rated analysts believe these five stocks are better buys.View The Five Stocks Here MarketBeat just released its list of 10 cheap stocks that have been overlooked by the market and may be seriously undervalued. Click the link below to see which companies made the list.Get This Free Report

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