Will Best Buy (NYSE:BBY) Die?
Feb 10th, 2009 | By Charles Delvalle | Category: Chart of the DayBefore I go into the Chart of the Day let me just say that even I have decided to cut my own spending. From spending ungodly amounts of money for breakfast sandwiches at Dunkin Donuts and McDonalds every morning, now I only spend a quarter as much at the Supermarket instead.
So this next chart should come as no surprise to you.
This is a chart of Personal Consumption Expenditures dating back to 1959 which was taken from Merrill Lynch (after being pointed out to me by Barry Ritzholtz).
As you can see, we have never once seen personal spending drop as dramatically as it has over the past year. It’s no wonder yearly sales in the auto market have been nearly halved… Starbucks is no longer planning to be on every corner (and in every bathroom)… and Circuit City went bankrupt and liquidated.
THIS IS UNPRECEDENTED.
It also means that other companies which rely on amped up consumer spending are likely to continue seeing tougher days ahead.
Best Buy (NYSE:BBY) I’m looking at you. Because the truth is, anyone can buy what’s at Best Buy for much less money if they simply go to Amazon.com or even walk into their friendly, neighborhood Wal-mart.
Hell, even Target (TGT) is starting to show more spunk when it comes to consumer electronics.
While I’m not saying Best Buy is a goner, they’re going to continue having a tough time in the next two years. Making them a great long-term short candidate.
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Charles Delvalle is a self-taught market-timing professional and value analyst who's followed and invested in the market for the past ten years. He uses a unique combination of technical and fundamental research to pinpoint rapid profit opportunities with stocks and options.
Charles is also a staunch contrarian and takes pride in finding undervalued sectors and discovering undervalued, cash-rich companies. He frequently mocks government stupidities and points out the "inaccuracies (or lies, take your pick) that government reporting frequently dispels as "truth".
