Consumer electronics retailer Best Buy (NYSE:BBY) is no longer in turnaround mode. The company's successful transformation over the past five years has righted the ship, and now CEO Hubert Joly has his eye on growth.

Best Buy released new financial targets on Tuesday as part of its Best Buy 2020 strategy. This strategy calls for another $600 million of cost savings, on top of $1.4 billion already realized over the past five years, as well a sharper focus on growth areas like smart home products and tech support services. Best Buy believes that it can grow revenue and earnings at a respectable rate over the next three years, bucking the retail trend.

A Best Buy employee helping a customer.

Image source: Best Buy.

A new three-year plan

With Best Buy's fiscal 2018 set to wrap up in January, the company is looking ahead three years to fiscal 2021. The retailer expects to grow revenue to $43 billion over the next three years, up from $39.4 billion in fiscal 2017. That's a compound annual growth rate of a little more than 2%, implying that Best Buy expects comparable sales to grow in a challenging retail environment.

With this forecast, Best Buy is reaffirming that its strong second-quarter performance, which featured comparable-sales growth of 5.4%, will not be the new normal. Still, comparable-sales growth of around 2% annually over the next three years will be an accomplishment for a company many thought was knocking on death's door five years ago.

Non-GAAP operating income is expected to reach $1.9 billion to $2 billion by fiscal 2021, up from $1.7 billion in fiscal 2017. This will lead to non-GAAP EPS between $4.75 and $5.00, representing compound annual growth of 8% to 9%. Higher revenue, cost savings, and share buybacks will all help drive Best Buy's per-share earnings higher. The company announced plans to buy back $3 billion worth of its shares over a two-year period in March, and it's on pace to do just that.

An opportunity-rich environment

While many retailers are struggling with weak store traffic and slumping profits, Best Buy sees myriad opportunities in the coming years to expand its business. The success of smart speakers like Amazon's Echo has given a boost to the smart home market, and Best Buy plans to capitalize as an increasing number of consumers look to automate their homes. The company plans to have its Best Buy Smart Home Powered by Vivint display in 450 stores by the end of October, and it will add 1,500 dedicated smart home employees to assist customers.

Providing services is the other big opportunity for Best Buy. The company is piloting a service that allows adult children to remotely check in on aging parents, and it's launching Total Tech Support, a new offering from its Geek Squad unit that provides tech support for customers regardless of where they bought their products. Best Buy is also expanding its In-Home Advisor program to all major U.S. markets, providing free in-home consultations.

Joly summed up the company's strategy: "Building on what we have accomplished, we are excited by the opportunities we have in this next chapter to grow the company by helping customers pursue their passions and enrich their lives with the help of technology, which is a much bigger idea and one that is rich with opportunities."

The stock could surge if things go right

Best Buy stock currently trades for around $54 per share, putting the price-to-earnings ratio based on the company's 2021 targets at roughly 11. If you back out the $2.1 billion of net cash on the balance sheet, the P/E ratio drops below 10. If Best Buy can hit its three-year target, the stock could be worth quite a bit more a few years down the road.

Working against Best Buy will be its need to continue to invest in its e-commerce operation. During the second-quarter conference call, CFO Corie Barry disclosed that the company was ramping up investments during the second half of this year, which could put pressure on the bottom line. With Amazon showing no signs of slowing down, Best Buy will need to keep investing to remain competitive.

Best Buy's three-year targets should please investors, although the task of hitting those targets will be easier said than done. If Best Buy succeeds, the stock's epic five-year rally could get a second wind.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.