PreMarket Prep Stock Of The Day: Best Buy

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

For those who don't have the time to tune in live or listen to the podcast, Benzinga will highlight one stock that merits further discussion. This analysis is not a buy or sell recommendation.

The retail sector has had some big winners and losers in recent months, and one of the big winners — perhaps unexpectedly — is Best Buy Co Inc BBY, the PreMarket Prep Stock of the Day.

Best Buy Follows The Broad Market Lower: Similar to the broad market, Best Buy made its all-time-high ($91.99) in February, up from its year-end 2019 close of $87.80.

During the unabashed selling in March, the issue swooned to $48.11. That low came in between Best Buy's December 2018 low ($47.72) and its January 2019 low ($50.94).

What A Rally For Best Buy: Best Buy’s rally off the low has taken place with only a few interruptions. One significant decline occcurred in early April ($64.78 to $51.71), when the broad market was extremely volatile.

Another brief retreat of the same magnitude came in mid-May, when Best Buy declined from $87.69 to $75.53 before regaining its momentum.

Big Boost For Best Buy: Just as the issue was consolidating near its all-time-high, it exploded on July 21, rallying from $90.28 to $97.36 on much higher-than-average volume.

The catalyst: Best Buy's announcement that sales are up roughly 15% compared to last year since stores reopened. The company also said that through July 18, online sales growth was roughly 185% on a year-over-year basis. 

Best Buy Follows Through And Then Some: The day following the monster breakout, it had a slight decline of just over $1 from $93.36 to $96.08.

From that day forward and over the next 16 sessions, Best Buy has had three days in the red, with the greatest one being a 73-cent swing into the negative. 

Over that course of time, Best Buy made a new all-time high in nine of the sessions.

We Could Not Have Been More Wrong: Sometimes the hosts of the show get things right and sometimes we get it wrong, and other times really wrong. That happens to be the case with Best Buy.

When we started doing the show in 2013, we were both convinced that the company was nothing more that a “showroom” for Amazon.com, Inc. AMZN and would not survive in the long-term. 

Here's the discussion on PreMarket Prep where we reflect on our bad call:

Best Buy Moving Forward: The rally continued in Friday’s session. After a higher open, Best Buy fell back and found support just above Thursday’s close at $108.

The issue made a new all-time-high by nearly $2, reaching $110.32 earlier in Friday's session.

With earnings not out until Aug. 25 and a strong market, the issue may continue to grind higher until that day. With such a major rally in the issue, it will take a big beat and perhaps raised guidance to propel Best Buy even higher. 

Photo via Wikimedia.