Last year i purchased BBBY @ 55 when the stock sold off on a lowered guidance report at the time.. After a nice ride my shares were called away @ 72.50 in November '13 for a nice gain.
I decided go shopping once again for a retailer and found myself back looking at BBBY. The stock sold off recently (12% in one day) after reporting earnings which were certainly respectable BUT the guidance issued was once again a bit lower than the street wanted and the shares sold off. The weakness continued into this week as the stock is now trading at 66-67 down from 80 in just less than 5 trading days.
I am currently waiting for a 'reversal' from this selling pressure to get back into this name as I view the selloff as overdone. This is another opportunity to take advantage of the "fear" that grips investors in spots like these.
Even with the lowered guidance BBBY is set to bring in ~$5.25 in earnings /Share in '14 . Applying it's 10 yr historical PE of 15.8 would imply a price of $80-85..
Key takeaways from the recent conference call : management re-emphasized its enthusiasm for and commitment to its investment in various initiatives regarding e-commerce website and information technology. Management also committed to return another $1.7 billion to shareholders in share repurchases by the end of FY15.
In my view this management team is a best-in-class group that leads this company to generate consistent sales and EPS growth. Its returns on capital are enviable.
Management is also committed to return another $1.7 billion to shareholders in share repurchases by the end of FY15.
The Daily chart below shows the recent weakness. I believe the shares can get back to the 75-76 level (fill that gap in the chart) then stabilize and with the earnings projected get back on an upward move to the low 80's.
And here is a Longer term Monthly chart indicating that the LT trend is still in tact and support may be provided at these levels or slightly lower.
If your portfolio is in need of exposure to the retail space (like mine) this is a great choice.. In fact it is a good 'growth" addition for anyone that can be patient and watch the story unfold.
I'll update with a trade confirmation ---
Best of luck to all !
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in BBBY over the next 72 hours.
Additional disclosure: I am long numerous equity positions - all of which can be seen here in this blog