Best Buy: Time to Take Profits

| About: Best Buy (BBY)

Since bottoming in October, Best Buy (NYSE:BBY) has forged a series of higher highs and higher lows. The stock was upgraded over the past two weeks by two brokerage firms, even as BBY had quickly moved up from $25 to $30. All in all, the stock has been a stalwart.

With bigger market share gains from the Circuit City liquidation and with a strict eye on its Operating Expenses and SG&A, BBY was able to beat estimates this morning and lift guidance for 2009. BBY now sees earnings for fiscal 2010 in a range of $2.50-$2.90. Using $2.7 as the new mean guidance, BBY has essentially lifted guidance by almost 10% for this next fiscal year.

With the stock currently trading at $36 in premarket, the market is giving BBY a 13-14 p/e. While not egregious, this is a premium to others in its group.

A look at the 1 year chart shows BBY’s recent move above its 200 day average and an upturned 50 day moving average (click to enlarge):

Even with these solid technical attributes, BBY will be running into sizeable long-term resistance in the $37-38 range. My plan is to take half of my profits off the table on the opening and to look to take the remaining position off the table as it works into this sizeable band of resistance in the coming days/weeks.

Disclosure: Author has a position in BBY but will be exiting as outlined above.