Consumer durables retailer Best Buy Co., Inc. (BBY) reports earnings before the opening bell on Thursday, March 1, putting a favorable track record on the line. The retailer of products from refrigerators and televisions moving down in size to handheld devices and accessories has topped earnings estimates for almost five years in a row.
Best Buy shares closed Tuesday, Feb. 27, at $71.49, up 4.4% year to date and up 9.9% from the Feb. 6 low of $65.05. The stock set its all-time intraday high of $78.59 on Jan. 21 and is down 9% since then.
Analysts expect Best Buy to post earnings per share of $2.03 when the company reports results on Thursday. The electronics retailer reported better-than-expected results for the first three quarters of 2017, benefiting from stronger-than-expected consumer demand from computing, wearables, gaming and tablets. This is expected to continue in the fourth quarter. (See also: Is Best Buy Amazon-Proof?)
The daily chart for Best Buy
Best Buy has been above a "golden cross" since Aug. 3, 2016, when the stock closed at $33.41. This bullish chart signal is not shown on this chart, as it occurred more than 52 weeks ago. A "golden cross" occurs when the 50-day simple moving average moves above the 200-day simple moving average, indicating that higher prices lie ahead. This bullish crossover remains in play as the stock has held its 50-day simple moving average since Feb. 12, with the average now at $71.19. The horizontal lines show that the stock is above my quarterly pivot of $68.69 and below my weekly risky level of $77.83.
The weekly chart for Best Buy
The weekly chart for Best Buy is neutral, with the stock just above its five-week modified moving average of $71.40 and well above its 200-week simple moving average at $40.83, which is the "reversion to the mean," last tested during the week of July 1, 2016, when the average was $29.52. The 12 x 3 x 3 weekly slow stochastic reading is projected to slip to 74.51 this week, down from 78.46 on Feb. 23.
Given these charts and analysis, investors should buy Best Buy shares on weakness to my quarterly pivot of $68.69 and reduce holdings on strength to my weekly risky level at $77.83. Note that, on the daily chart, Best Buy is holding its 50-day simple moving average of $71.19. The stock is also holding its five-week modified moving average of $71.49 on its weekly chart. (For more, check out: Why Is Best Buy Stock So Volatile?)