On my browser home page I have about 120 stocks that I follow, to varying degrees. On a day like yesterday, when the Dow Jones Industrial Average
On the surface, the numbers look very attractive at Best Buy. The stock has just a 9.1 trailing P/E ratio, its forward P/E ratio is a lowly 6.9, and it pays a nice 2.4% dividend. With Christmas around the corner and Black Friday kicking off in style, you would think that a retail powerhouse like Best Buy with those numbers would be screaming "buy, buy, buy!"
Best Buy also has a competitive advantage over big-box and online retailers with its Geek Squad and other services. A consumer may find a cheaper product somewhere else, but the high-value job of installing and maintaining electronics will keep Best Buy relevant even as other retailers take sales.
As fellow Fool Austin Smith recently pointed out, it's not Best Buy or Target but Amazon.com
There's also the proliferation of electronics at big-box retailers Best Buy has to be worried about. Best Buy used to be the only game in town for TVs, computers, and a variety of other electronics, but Target and Wal-Mart have changed that.
Foolish bottom line
The value looks strong in Best Buy's stock, but I just can't get too excited about a retailer that's had an anemic growth rate and whose market is being invaded by low-cost competitors. If Best Buy can leverage its service business and expand into electric vehicles and maybe even solar power, as I've suggested before, they maybe it will be worth another look. For now, Best Buy has "value trap" written all over it.
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