Thursday, September 15, 2011

Best Buy Should Easily Outperform Amazon

Best Buy (BBY) and Amazon (AMZN) appear to be companies headed in different directions. While Amazon has seen steady revenue and earnings growth over the quarters and over the years, Best Buy's revenue has been flat, with its earnings actually declining.

But what makes a stock attractive is not simply the trajectory of the results of the underlying business. If this were the case, stock prices wouldn't matter, as a growing business would be a "buy" at any price. In the cases of Amazon and Best Buy, the stock price differences between these two companies have become so extreme that it has become highly likely that Best Buy stock will outperform that of Amazon in the coming quarters and years.

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