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Buy Best Buy

Investment from 5,900 USD

Expires: 15/03/2019

Expected
yearly returns
97%

Best Buy is a major US retailer that sells consumer electronics, home office supplies, video games, home appliances, and accompanying services through their stores and website, with around 1,600 retail outlets in North America alone. Most of Best Buy’s revenue is generated in the US. Among its largest shareholders are: BlackRock (6.53%), J.P. Morgan Chase (3.62%), Goldman Sachs (1.84%), and Morgan Stanley (1.21%).

Growth factors:

  • Continued implementation of a strategy to create and bring new innovative products to market, namely:
    - Smart Home and In-Home Advisor are products that were developed in collaboration with Vivint and provide various solutions for home automation and security. The company is aiming to become the top provider of smart home technology.
    - Assured Living (home monitoring system) allows customers to monitor their homes remotely and keep an eye on family members to ensure that they’re ok.
  • Improving marginality: the company’s return on equity is 27.65% (up from 19.14% at the start of 2016), the return on assets is 8.97% (up from 6.24% at the start of 2016), and return on invested capital is 21.05% (up from 13.91% at the start of 2016). In the period from February to July 2017, the company made 22.07% in net annual profit.
  • Continued growth of other financial indicators, particularly revenue, which grew at an annual rate of 2.9% from February to July 2017.
  • Low debt load: the company’s ratio of total debt to assets is 10.07%, while the total debt to EBITDA is a low 0.55, and the ratio of net debt to EBITDA is negative at -0.86 thanks to high stock liquidity.
  • Company shares are trading with an EV/EBITDA discount of 29% and an EV/Revenue discount of 47% in comparison to other companies.

Investment period ends:
15/03/2019

Expected yield is calculated according to 90% capital protection and the price of the base asset at expiry, equal to 83 USD.

Technical Analysis:

Best Buy share prices are in a long-term upwards trend and are currently located around the zero line of the 200-day moving average. The significant technical levels are: 63.01; 58.60; 52.52; 48.64; 44.56; 41.62; 38.99; 35.54; 32.08; 29.67; 25.79; 22.33; 17.41; 10.82.

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