Best Buy is not a typical holding for the fund, as a long term secular growth story, but as always I try to keep about 10% of the portfolio for shorter term opportunities, and with retail simply washed out and hated the environment is here for a nice move.
Technically, Best Buy broke back above its 200 day moving average last Tuesday, and confirmed this Wednesday (in a terrible tape) and Friday with 2 more closes above that mark. We also have 3 days in a row of higher lows, so a trend seems to be in place. While short on cash, I will be looking for candidates to sell to free up some money. While the market as a whole is miserable we are simply overdue sooner or later for some level of bounce and I believe Best Buy will be providing some good results in the quarter ahead. The company reports December 18th, but that will be "last quarter's results", so while there is always risk holding a company through earnings, I think they could speak to positive trends that will be happening in the last week of November through mid December at the time of that call.
The stock is currently at $48, a breakout above $50.50 would take the stock to the highest level since Feb 07. A failure to advance past the $49-$50 range would portend a fall back in the stock price. A position like this is very easy to manage since the 200 day moving average is $47.25. Any drop below this level, and you take the small loss and say "wrong decision".
The stock trades at about 15x earnings, for about 15x growth but this is neither here or there for this type of position. This is simply a Christmas trade with a holding period of perhaps 4-8 weeks, depending on stock performance. A speculator might look at Circuit City instead but Best Buy has proven to be far and away the best merchandiser in this space, so I will go with the quality leader here.
No position but will be looking to buy early this week
