by Ian Hardy

Created on: March 07, 2009   Last Updated: March 10, 2009

After the demise of Circuit City, quite a few investors are wondering: is Best Buy now a buy? Best Buy (BBY) is a publicly traded retailer of electronics, appliances, and computers, as well as DVDs, CDs, video games, and other home-entertainment products. Best Buy is headquartered in Richfield MN, its CEO is Brad Anderson. Best Buy has over 1000 stores across the U.S., and since 2001 has expanded into Canada, China, Turkey, and Mexico.

Since the chief competition in Circuit City has folded, Best Buy could stand to take over Circuit City's former market share, expand earnings, and become a far more competitive business than it already is. Butwill the American consumer help Best Buy accomplish this?

After all, we have entered a recession and some are stoking fears about a lengthy economic depression. Inany recession or depression, luxury goods are foregone in favor of the staples of life: food, shelter, transportation, and other necessities. If the bailouts from Washington work and the stimulus plan prevails, then we could see a resurgence in growth in the consumer electronics industry. If the government plans fail, we may see the consumer electronics market stagnate, and possibly shrink further. As with many stocks today, Best Buy is in a "wait and see" phase in the market cycle.

Best Buy is certainly at a crossroads: they must decide on a corporate strategy which will best enable them to profit from the tough times ahead. Should they immediately expand to fill the void left by Circuit City? Or should they play it safe, cut back, and try to wait the recession out? Only the upper management at Best Buy knows the answers to these questions. Best Buy has been expanding for many years, with stores opening up all across the U.S., and they may see the recession as an opportunity to expand so that, when the economy recovers, they will be all the stronger.

If Best Buy expands, its investors could see tremendous returns. If it contracts, it may present an excellent buying opportunity for when the market does recover. Best Buy as a strong corporate history and a proventrack record: they know what they are doing, so it is definitely a stock worth considering in the coming weeks and months.

If Best Buy chooses to take the cautious route and fails to expand, new competition may enter the playing field and may make it more difficult for the company in the future. This is defintiely an excellent stock to watch: there are interesting, and potentially very profitable times ahead for the company, so any investor ought to take note, do due diligence, and make an informed decision on whether to buy Best Buy.

What if Best Buy chooses to wait things out and ends up losing money? There are ways to profit from this, as well, through options and other instruments. Options on Best Buy, while extremely risky, could be an immensely profitable investment on either the upside or the downside.

The bottom line is, as with any investment, there is a tremendous amount of risk of financial loss. There is also a tremendousopportunity for gain. It is always best to consult a professional investment advisor before investing. This is undoubtedly an excellent stock to watch.

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