While the retail space isn't exactly booming these days, certain areas and certain types of companies are attractive. For example, discount retail is a sexy story right now because those types of stores are likely to see traffic due to the continuing economic crisis. Another space that is looking increasingly attractive to me is the retail electronics space. I'll outline why and discuss a player that deserves some closer inspection.

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Time To 'Crank Up The Volume'?
American consumers have been curtailing their spending for some time now for obvious reasons. But with the economy showing signs of a pulse and the worst at least appearing to be in the rear view mirror, I speculate that most people will start spending money on themselves. To that end, I think the demand for things like televisions, phones, cameras, computers and all kinds of gadgets will be up substantially this year.

As far as which companies can benefit, Best Buy (NYSE: BBY) seems like a total no-brainer and an obvious play. Not only does it sell a large number of the aforementioned items, but it also sells appliances that could well be in demand, too. Many families likely held off buying washers, dryers and other higher-priced electronic items and goods until some of the economic dust cleared. Best Buy is also impressive in another sense. That is, it's beaten analyst estimates in three of the prior four reported quarters, and it's expected to grow its earnings per share more than 7% from this year to next year.

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Tune In Specifically To Radio Shack
Again, there is a good reason to get excited about Best Buy. But another retail electronics player also warrants attention, and that is Radio Shack (NYSE: RSH), which has a long operating history. Radio Shack has made a tremendous comeback over the last year. Whereas its stock languished in the single digits last spring, it now trades in the upper teens, and the company has done a good job on the earnings front, exceeding expectations two out of the last three reported quarters. Going forward, I'm optimistic as it seems increasingly more investors are paying attention to the story.

As things stand now, Radio Shack is expected to earn 58 cents a share in the fourth quarter, which is due out later this month. I think the company could come in a few cents better. Again, the improving economy, a pent-up demand from consumers and the company's recent earnings beats leave me upbeat.

Other Ways To Dabble In Electronics
While most investors seem to turn their attention toward Best Buy or Radio Shack, another great way to play the future of electronics and all those new gadgets that come out every year is by checking out companies like Wal-Mart (NYSE: WMT) and Target (NYSE: TGT). Both sell large volumes of cameras, televisions and other desirable electronics. In short, those two well-known stores stand out to me because a large volume of customers shop their locations daily, and because they are accessible to very large populations. And, of course, they have competitive prices on a multitude of popular items.


Wal-Mart presently trades at about 14.5 times this year's estimate, which is interesting given its position within the space and opportunity to grow over the next couple of years. Target is also attractive at 15.5 times this year's estimate, and I think a stock price above the $60 level would be a lot fairer.

Bottom Line
The electronics space will remain popular among consumers, and I believe that the recovering economy makes the space increasingly more attractive. In short, while Best Buy is an obvious play on the business and a company with positive attributes, Radio Shack is worth closer inspection, too. Not only has the company been doing well on the earnings front, but its profile among the investment community appears to be improving. Another indirect way, if you will, to play the electronics space is by checking in on discounters like Wal-Mart and Target. Both trade at attractive price to expected earnings multiples. (For another take, see Analyst Forecasts Spell Disaster For Some Stocks.)

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