Best Buy is in excellent short at the current price. There are several factors to take into consideration:
1. BBY was $42-$43 in January this year when the DOW was near 14k now. The market has dropped to 9k and the stock is at $32?
2. The RSI is at 70. This is showing an overbought condidition. The RSI has hit 70 or above (3) times in the past year. The last time was at $47.50 right before the big fall in August. We all know what happened then.
3. The volume the past (2) trading days has been below average to say the least. The stock is not going up on significant buying pressure. There are many shorts gathering a position at these prices. Anyhting $30 or above short as much as you can afford.
4. 12/01/07: BBY Had 1.6 billion in cash. 594 million as of last quarter. Same periord Long term debt is up from 627 million to 1.12 billion. 256 million to 1.2 billion same time period obersvation of short term debt. Obviously, they have had increases in inventory, AR to off set some of this.
Finally, take a step back. Sales are going to down 15-25% at the minimum this year. The USA has had a negative savings rate for a long time, times are a changing.
Let's say the shorts are wrong. BBY returns to 85-90% of where it was during the housing bubble, yadda, yadda...that is a price of $40 dollars per share (was about 50 in the good times) The upside potentinal is SO limited in the short term it is ridiculous.
Best of luck. I am short at $31.50 and will double position if it gets to $32-$33.
Good analyses, especially with "Sales are going to down 15-25% at the minimum this year"!!!!! I know there are many smart investors who are shorting BBY. But I never understand how people with such bad knowledge on a company has the courage to short it.