I was a little upset last week when I rolled my chair back from my desk, stood up, and then watched helplessly as my laptop crashed to the floor. At first I was optimistic that the portable computer could take the hit, but upon further inspection, the broken motherboard caused the keyboard to bulge outward.
The eMachines laptop lasted more than a year since I had purchased it at the blue-and-yellow-clad Best Buy (NYSE:BBY) for a mere $600 after mail-in rebates. This time around I fell in love with a Compaq, considering that my brother-in-law, the Hewlett-Packard (NYSE:HPQ) computer wizard, told me he would break every bone in my lips if I didn't buy either HP or Compaq.
I made out like a bandit by buying a $1,200 (after $150 in rebates) Compaq laptop and getting a Best Buy credit card, which gave me the purchase interest-free until January 2006. That works out to $50 per month over the next 24 months, proving that there is always a deal to be had at this electronics-retailing dynamo.
While there is a whole host of other companies that sell electronics and computers, including Circuit City (NYSE:CC), CompUSA, Radio Shack (NYSE:RSH), Wal-Mart (NYSE:WMT), Target (NYSE:TGT), Costco (NASDAQ:COST), and BJ'sWholesale Club, none of them connects with customers as well as Best Buy. The company has the critical mass, through its more than 800 stores, to deliver products that are both attractive and affordable to the average consumer.
Electronics retailers may come and go, but Motley Fool Stock Advisor pick Best Buy, the current industry category killer, is here to stay. The company reported impressive third-quarter earnings today that were anchored by a double-digit revenue growth and a 3.2% increase in same-store sales relative to the year-ago quarter. Best Buy expects revenues to grow 12% in fiscal 2005, including a 4% to 5% increase in same-store sales. Management cited the company's focus on "meeting customers' needs" as a factor in its gobbling up additional market share.
The company's earnings of $0.45 per share beat the analysts' consensus estimate of $0.44 per share and blew past last year's earnings of $0.37 per share by 22%. Best Buy is seeing strong results from its new segmented-store concept. The concept, with its footing in California, redesigns store offerings to target one or two of the following groups: busy mom, young, early adopter, small-business customer, affluent professional, and family man wanting lasting technology.
Best Buy repurchased $24 million of its own shares in the third quarter and has effectively been using excess cash for store expansion and share buybacks. The shares, which are trading at 20 times the fiscal 2005 earnings estimate of $2.94 per share, look attractive relative to the company's 21% expected earnings growth this year and 0.79% dividend yield.
You can make your own deal after reading these other takes:
Fool contributor Phil Wohl spent more than 12 years on Wall Street and owns shares of Costco.
