Why Best Buy's Shares Popped (BBY)

Why Best Buy's Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of electronics retailer Best Buy (NYSE: BBY ) are up 10% today on speculation the company's founder would make a buyout offer.

So what: According to reports, founder Richard Schulze is working with Credit Suisse to explore a takeover, although no one will confirm the reports. He may also be trying to push a turnaround effort into high gear as his 20% stake in the company becomes worth less and less by the day.

Now what: As dire as Best Buy's stock performance has been the company's financial performance isn't as bad as you may think. The company is expected to earn $3.62 per share this year, meaning shares trade at just over six times earnings, so a buyout would be an interesting move. I wouldn't bet against the buyout, but betting for it or trying to pinpoint a price isn't a gamble I like either.

Betting on buyouts is risky business and can lead to wild swings in a stock's price, both up and down. But if you like the turnaround effort and the value shares currently trade at I don't think this is a bad bet at the current price.

Interested in more info on Best Buy? Add it to your watchlist by clicking here.

Jeff Fischer and team have demystified options. And they can rack up income like $1,030... $2,626... and $3,228 on a schedule you can set your watch by!
That's why we're glad to announce every single one of their closely guarded strategies is available to YOU during May and June – 100% FREE, no strings attached! Just enter your email address in the box below...

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment icon found on every comment.