FR: Best Buy Plays Copycat

Article: Best Buy Plays Copycat

Up next in my “Fool Revisited” series was an article that appears written when we covered the retail sector. I wrote about a retail company – Best Buy (NYSE: BBY) – that seemed to be copying a lot of its competitors in order to stay relevant. This was at a time when Best Buy was struggling to stay relevant because of Amazon (among others), and a little before they almost went private because of poor performance.

This article didn’t have a whole lot of real substance; you can definitely tell it was just a quick take about a sector without a whole lot of in-depth research.

Here’s the ancient tweet announcing my article back in the day:

Had an investor purchased and held onto Best Buy after the publication of my article – which was a soft “watch list” recommendation – they would have done pretty well against an S&P 500 index fund. The compound annual growth rate (CAGR) and total growth of Best Buy easily outpaced the S&P 500 from article publication (September 9, 2011) through the end of December 2017:

Stock Start Price End Price CAGR Total Growth Value of $10,000
Best Buy $19.93 $68.47 21.58% 243.55% $34,355
S&P 500 $1,154.23 $2,673.61 14.23% 131.64% $23,164

Source: Yahoo! Finance & author calculation; Stock prices include dividends & stock splits

Best Buy seems to have turned the corner a bit in the six-plus years since I wrote about them for the first time, but it’d be hard to say if that is a product of better performance or simply a frothy market. Every time I make a visit to a Best Buy, I feel like the store remains stuck in the past, without much differentiating it from other similar retailers. Nevertheless, before I could make a solid recommendation on the company these days, I’d have to dig a little deeper. I’m personally not super high on retail outside of Amazon and super niche store, but a closer look might be able to convince me otherwise, especially if their past performance was because of a new direction or change in philosophy.

Until next time…

Disclaimer: I do not own currently own shares in Best Buy, and I shop there pretty infrequently as well. I also have no plans to purchase shares within the next 60 days in any account in which I manage investment funds. You can read a little about my personal investment philosophy here.


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