Should you invest in BBY shares? Evercore tips Best Buy to benefit from rising inflation

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Sep 17, 2021
  • Best Buy shares on Friday ended slightly higher after making Evercore’s list of best retail stocks.
  • The analysts pointed to rising inflation as a key catalyst for BBY growth.
  • They compared the current inflation trend to the period between 2000-2007.

On Friday, Best Buy Inc. (NYSE:BBY) shares edged slightly higher after Evercore ISI analysts tipped the stock to perform well in the coming years, amid the rising inflation. 

The analysts made the update following this week’s US retail sales report for August, which showed a Y/Y increase of 15.1%.

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They compared the rising inflation trend to the period between 2000-2007, one of the most notable economic booms. As a result, they expect retail companies, and especially consumer electronics retailers to witness significant top-line growth in the coming years. As a result, Best Buy could be one of the companies to benefit from this growth making it a top buy.

Should you buy Best Buy shares in September 2021?

From an investment perspective, Best Buy shares trade at an attractive P/E ratio of just 11.19, making the stock an exciting option for value investors. In addition, analysts expect the company’s EPS to grow by 18.90% this year before rising at an average annual rate of 9.10% for the next five years.

However, comparing BBY’s future earnings growth to its 5-year average, it seems to be experiencing a slowdown, which could limit the interest of growth investors. Therefore, Best Buy looks like a good short-term buy.

Long-term growth investors could join in once Evercore’s thesis is confirmed in the coming quarters.

Source – TradingView

Has Best Buy found trendline support?

Technically, Best Buy shares appear to have recently found trendline support in the intraday chart following this week’s decline. However, the stock price is yet to reach oversold conditions of the 14-day RSi leaving more room for downward movement.

As a result, although the stock price edged slightly higher on Friday, it could continue to fall in the coming sessions. Therefore, investors can target extended downward profits at $104.74 or lower at $99.23. 

On the other hand, if the rebound materializes, BBY could find resistance at $114.74 or higher at $121.07.

Bottom line: a trendline breach could be crucial

In summary, although Best Buy’s current valuation makes it an exciting buy, if the stock price breached the support trendline, it could signal a period of extended declines. 

Therefore, investors can monitor the stock’s movement for the next couple of trading sessions before deciding to buy or sell.

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