Best Buy Breaking Out (NYSE: BBY)

Shares of Best Buy (NYSE: BBY) surged higher by 4.01% today to close at $38.64. The move came on heavy volume with 11.7 million shares traded versus the 6.9 million average.

What is significant about today's move though is that the stock finally climbed above its 50-day and 200-day moving averages. Shares of Best Buy have struggled since disappointing investors back on December 15, 2009 with its Q3 earnings report. The stock hit a 52-week high of $45.55 the previous day and has trended lower ever since. On February 2, 2010 the stock hit a low of $35.01 and has been consistently making higher highs and lower lows.

I'm also bullish on Best Buy fundamentally, mainly because of its valuation. The consensus EPS estimate for 2010 is $3.11 per share, so the stock trades at a forware P/E of 12.42. The company has grown earnings at 13.4% since 2003 and pays an annual dividend of $0.56, which at today's closing price yields 1.50%.

With the company reporting earnings on March 25, look for a nice runup into the release. Shares are clearly gaining upward momentum and the next 20 days may offer even more upside. Given that most retailers have reported postive comps and February sales lately, Best Buy may even challenge its 52-week high with a good earnings report.