Don't Expect Best Buy Stock to Slow Down

Best Buy stock has surged to nine-year highs, but the shares seem to have more room to run

Apr 25, 2017 at 10:12 AM
facebook X logo linkedin

Best Buy stock has rallied almost 54% over the past 52 weeks, breaking out to nine-year highs in the process. What's more, these gains have come amid sector-wide headwinds, with the SPDR S&P Retail ETF (XRT) lower on a year-over-year basis. Still, sentiment across Wall Street is overwhelmingly bearish toward BBY shares, creating a perfect contrarian setup for the outperforming stock.

bby chart april 21

First of all, 10 of the 15 analysts covering BBY say it's a "hold" or "strong sell." This suggests the shares are overdue for bullish recognition from the brokerage bunch. Meanwhile, short interest makes up a whopping 13% of the stock's float, which equates to more than eight days' worth of buying power, based on average daily volumes. Shorts could begin to cover, which would help lift BBY.

Options activity has also been extremely bearish. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows a 10-day put/call volume ratio of 2.11, and that ranks in the 76th annual percentile. An unwinding of these put positions could act as yet another upside catalyst for the retail stock.

Near-term BBY options are also pricing in unusually low volatility expectations at the moment. This is based on the equity's Schaeffer's Volatility Index (SVI) of 27%, ranking in just the 6th annual percentile.

Subscribers to Schaeffer's Weekend Trader services received this commentary on April 23. 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI