Avoid This Value Trap

The following video is from today's MarketFoolery podcast, in which host Chris Hill, along with Mike Olsen, Jason Moser, and Joe Magyer, discuss the latest business news. Best Buy reported better-than-expected quarterly earnings, and shares rose on the news. With the stock recently hitting a five-year low, is now the time to buy? In this segment, the guys analyze Best Buy's challenges and share why, despite the low valuation, investors should continue to steer clear of the stock.

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Chris Hill owns no shares of any of the companies mentioned. The Motley Fool owns shares of Amazon.com and Best Buy. Motley Fool newsletter services have recommended buying shares of Amazon.com and writing puts on Barnes & Noble. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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  • Report this Comment On May 22, 2012, at 10:48 PM, gtbohrer wrote:

    *chuckles* The protection plan for the AppleTV is 14.95. A little factchecking is occasionally useful...helps you sound like you know what you're talking about.

    But it IS cool to sound knowledgeable when trashing BBY.

  • Report this Comment On May 24, 2012, at 9:24 PM, thesmartestfool wrote:

    BBY's Q1 earnings numbers were a smoke and mirror show. If you baseline the numbers by accounting for the extra week included in this year's Q1 and factor in the reduced tax rate, EPS was $0.38 (GAAP) and revenue was negative 7 percent when compared to Q1 for last year. The numbers look very different when you compare apples to apples and get rid of the extra week.

    BBY's Q1 included 14 weeks this year vice 13 weeks last year. The tax rate for this period was 30.6 percent versus 34.6 percent for last period.

    When the other shoe drops, make sure you're not under it...

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