Toilet paper-panic buying at Walmart amidst the coronavirus outbreak has nothing on stocking up on tech hardware at Best Buy in order to work from home — perhaps for months. Remember, you can’t successfully wipe your rear end if you don’t have a gig to pay for two-ply.
And therein lies the opportunity for investors in a stock market that has been shredded in the past month.
Along with the rest of the Yahoo Finance team, I’ve transitioned to full-on work-from-home mode. In order to pull off such a feat like anchoring live business news, you need an assorted array of tech gadgets. For me, that has included a new webcam (Logitech is way better than the pre-installed Mac webcam), a giant microphone, USB adapters (thanks Apple for the extra work), an iPad (must check the Yahoo Finance trending ticker page in between questions to guests), an iPad magic keyboard (it’s OK, Microsoft’s Surface keyboard is superior). I may yet go back to buy my first printer in 15 years, too.
I will let HP’s new CEO Enrique Lores know when I pull the trigger on that printer. We could all use a little uplifting news right now.
Apologies in advance to all the trees out there — but I need some printer paper for work.
Each time I have ventured to the Best Buy store it has felt more akin to a Black Friday shopping event than a health crisis triggering mass quarantines and social distancing. I visited one Best Buy store in New York City’s Union Square neighborhood — it was only letting in 30 people at a time in an effort to promote social distancing. It didn’t matter I had bought the products online, I had to wait outside just like everyone else.
Once inside, a helpful associate told me she has never seen anything comparable to what she has experienced this past week. Worse than the Black Friday frenzied buying, she said. Top items according to this store associate: batteries, PCs, laptops, LCDs, and all Apple adapters.
Sorry, 5-cent bags sold out earlier in the day. I carried my stuff back to the office several blocks away. Luckily, I didn’t get jumped in what has become a crazier than normal world.
Nope this is not a Black Friday sale at Best Buy. It’s coronavirus crowd control at a Best Buy in Astoria, NY. This one only letting in 10 people at a time versus 30 at a NYC Best Buy store I visited Tuesday. $BBY pic.twitter.com/y391HYfQ3N— Brian Sozzi (@BrianSozzi) March 18, 2020
Since I wasn’t allowed upstairs at the Union Square store — because I was there to pick up an online order, I didn’t get to see the empty shelves that I knew existed. Fortunately, that sense of loss didn’t last too long.
The next day I visited a Best Buy store in Astoria, NY. Unlike my prior visit, this Best Buy store was only letting in 10 people at a time. Walking to the back of the store to pick up yet another online order (more Apple adapters and an ethernet cable to attempt to hardline my work Mac — which didn’t work) revealed the damage down the aisles. Empty Apple adapter shelves. Empty laptop section. Batteries sold out. No open box stuff for sale.
“I am exhausted,” one of the Best Buy associates wearing rubber gloves told me. I believe it. To move that much merchandise out of the store and into the hands of people in it —or online — is no small feat. Speaking of online, some work from home items such as webcams are sold out at Best Buy. I know I have been lucky to secure the tech hardware I did. Sometimes the good Lord is on your side.
Having said all of this, I am surprised to see Best Buy’s stock (BBY) down 40% in the past month — underperforming the S&P 500’s drop. Sure, people potentially losing their jobs amid coronavirus cash crunches isn’t good for any retailer. Neither are cities ordering quarantines and malls being shutdown.
But when it comes to Best Buy, the market may be underestimating how a major spike in those working from home could influence the bottom line of an electronics retailer for a quarter or two. I have witnessed it first hand, and so have my stellar colleagues also stocking up on tech gear.
Hat tip to Jefferies retail analyst Jonathan Matuszewski for getting it.
“We sense the spend tailwind tied to remote working could be a larger offset of social distancing-fueled traffic impairment than previously contemplated. Our data shows Google searches for 'computer monitors' matching Black Friday levels and BestBuy.com seeing increased site visits tied to 'work from-home' products. With Apple stores now closed 'indefinitely', Best Buy can serve new & lapsed customers left with few options,” Matuszewski wrote in a note to clients.
Matuszewski marked up his profit estimates for Best Buy’s first quarter based on his observations.
With Best Buy’s stock trading on its cheapest price-to-earnings multiple in years, a balance sheet with more than enough cash to weather an economic slowdown and work-from-home buying in full effect — the electronic giant’s stock may be a steal. If only they sold toilet paper...the stock would be the buy of a lifetime currently.