The house rules are simple in this weekly column.

  • I bash a stock that I think is heading lower.
  • I offset the sting by recommending three stocks as portfolio replacements.

Who gets tossed out this week? Come on down, Best Buy (NYSE: BBY).

The song remains the same  
This has been a bad week for Best Buy, and I can't be the only one kicking myself for not spotting the disconnect earlier on.

When Circuit City liquidated last year, we wrote it off as an anomaly. Circuit City's leveraged balance sheet and bone-headed decisions did it in.When Best Buy failed to immediately deliver monster comps and ridiculous markups in the absence of Circuit City, we shook our heads and made recession the scapegoat. However, now that revenue, comps, and earnings dipped in Best Buy's latest quarter, the company is out of excuses. Blue shirts and khaki pants just aren't the fashion statement they used to be.

Sadly, Best Buy has become the seafood restaurant that taught its patrons how to fish. After all, once you sell someone a smartphone they can check Best Buy prices against cheaper alternatives online. Sell someone a web-surfing Blu-ray player, TiVo (Nasdaq: TIVO), or video game console that can stream web content in the living room, and there's no longer much of an appetite to buy DVDs from the store.

In short, Best Buy has become a victim of its own success.

I'm not the only one that was caught by surprise. Analysts have now sorely overestimated Best Buy's earnings power in two of the past three quarters.

Best Buy isn't going to disappear anytime soon. It's not going to pull a Circuit City overnight. However, stock gains will be hard to come by as more investors realize the diminishing relevance of Best Buy.

You can do better than that.

Good news
As I do every week, I don't talk down a stock unless I have three alternatives that I believe will outperform the company getting the heave ho. Let's go over the three fill-ins.

  • Amazon.com (Nasdaq: AMZN): Once again, the Internet kills the bricks-and-mortar star. The leading online retailer doesn't run on the same fiscal calendar as Best Buy for a true Macs-to-Macs comparison, but Amazon's 39% surge in net sales in its latest quarter is huge. More than half of its sales are now coming from Amazon's electronics and other merchandise category, which soared by 68% during the period.
  • Funtalk (Nasdaq: FTLK): It's not the gargantuan size of its stores that's hurting Best Buy, because RadioShack (NYSE: RSH) is also smarting as it trades a sneeze away from a new 52-week low. If investors want some octane in consumer electronics, their best bet may be to head abroad. Funtalk is a Beijing-based retailer of wireless phones and accessories. Retail revenue soared 42% in its latest quarter, though a good chunk of that came from acquisitions as Funtalk's empire expands to 662 stores. Earnings more than doubled. Value investors willing to take on Chinese risk will appreciate a growing consolidator trading for just seven times this fiscal year's earnings and six times next year's target.
  • hhgregg (NYSE: HGG): It's problematic to find hhgregg also coming up short on the bottom line in two of its three latest quarters, but the chain's growth is impressive -- even as Wall Street curbs its expectations. Analysts see earnings growing 30% this fiscal year and 28% the following year. This comes as a sharp contrast to the projected earnings slip this year at Conn's (Nasdaq: CONN) and what we saw out of Best Buy this week.

I'm sorry, Best Buy. You're no longer the best buy.

Best Buy is a Motley Fool Inside Value recommendation. Amazon.com, Best Buy, and HHGregg are Motley Fool Stock Advisor selections. Motley Fool Options has recommended buying calls on Best Buy. The Fool owns shares of Best Buy. 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.

Longtime Fool contributor Rick Munarriz doesn't mind taking out the garbage every so often. He does not own any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.