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Dr. Kris has two degrees from MIT because one just wasn't enough. Her life goal was to figure out the universe and having done that (at least to her satisfaction), she decided to tackle something even more difficult—the stock market. Applying the scientific method along with an insatiably... More
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  • Market Notes: Has Best Buy Found A Turnaround Formula? -- April 4 0 comments
    Apr 4, 2013 6:43 PM | about stocks: MTU, JOF, BBY

    4:00 pm ET: The major averages stopped their slide ending the day above recent support levels. Though this sounds like good news, we have yet to face tomorrow's jobs numbers which could easily pull the plug on any attempt at a rally. Although there are some positive economic signs, there are an equal number of negative ones and right now the teeter-totter is equally balanced. Our economic recovery is fragile and continuing problems in the Eurozone could have enough economic impact to derail it. Multi-nationals especially would bear the brunt of the pain. Ford (NYSE:F) and General Motors (NYSE:GMC) both cited dismal European sales figures in their last earnings reports.

    Just as the Fed's quantitative easing policies have been bolstering the US stock market, so has Japan's stock market been similarly supported by those of the Bank of Japan's. Yesterday we noted that Japanese beverage maker Kirin (OTCPK:KNBWY) was on a roll and today it shot up another 5% (note that it is richly valued). Following in its footsteps were two Japanese banks Mitsubishi Financial (MTU, $6.27)and Sumitomo Mitsui (SUTNY, $4.89) along with the Japan Smaller Capitalization (JOF, $8.68) closed end fund which all broke out to new highs. Japan's central bank is determined to keep the sun rising for a while and a move into some Japanese issues still makes good financial sense.

    Trade Note: Has Best Buy found a turn-around formula?
    Today, big box retailer Best Buy (BBY, $25.13) announced that it plans to roll out in-store kiosks devoted to Samsung products, notably notepads and smart phones (both high-margin items). Right now Samsung doesn't have any company owned stores in the US unlike Apple, Sony, or Microsoft and this joint venture with Best Buy could be a growth catalyst for both companies. One reason Apple (NASDAQ:AAPL) has been so successful is because of its Apple stores. These customer-friendly environments are sleek and sophisticated and offer a hands-on product experience. Perhaps the biggest selling point is their friendly and knowledgeable staff who are always willing to help their customers get the most out of their Apple devices. All of this adds up to a devoted consumer base who seem more than willing to pay up for these perks.

    I think it can't hurt Best Buy to take a lesson from Apple's marketing manual and apply it to Samsung whose innovative products have been generating more buzz than Apple's have lately. (Witness the Galaxy Note 2 and the Galaxy S4.) In fact, I'd like to see the entire Best Buy store redesigned as a collection of eye-catching boutiques staffed with people who know their product lines inside and out and are devoted to helping customers learn how to use them. Think a mini Geek Squad per kiosk, but wearing designer spectacles. Sure, there will always be those who will want to pay lower prices online, but as Apple has shown, people are definitely willing to pay up for a stimulating product environment and excellent customer service.

    Apparently, many investors are excited with the Samsung/Best Buy pairing as shares of the latter surged 16% on the news. Because of today's big jump, though, I wouldn't rush right in and buy it here. Rather, I'd wait until the dust settles and we know more about Best Buy's marketing intentions.

    Themes: long ideas, foreign stocks Stocks: MTU, JOF, BBY
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