A historically bullish signal could put BBY at a new all-time high
To say electronics retailer Best Buy Co Inc (NYSE:BBY) has staged an impressive comeback off its early March trough would be an understatement. The security quickly closed a bear gap sparked by a mixed first-quarter earning report, and is now trading just within striking distance of its Nov. 5 all-time high of $124.89, with solid support from the 20-day moving average. And though a consolidation pattern near the $122 level has prevented shares from hitting more fresh highs, a historically bullish signal flashing could give BBY a much-needed boost toward a new all-time peak.
According to one study from Schaeffer's Senior Quantitative Analyst Rocky White, these recent highs come amid historically low implied volatility (IV) -- a bullish combination for Best Buy stock in the past. White's study shows that there have been four other times in the past five years when the security was trading within 2% of its 52-week high, while its Schaeffer's Volatility Index (SVI) stood in the 20th percentile of its annual range or lower, as is the case with BBY's SVI of 28%, which sits in just the third percentile of its 12-month range.
According to this data, Best Buy stock enjoyed an average one-month return of 6.9% following these signals and was higher one month later 75% of the time. BBY currently sits at $119.61, and a move of similar magnitude would stick the stock at a brand-new all-time high of $127.86.
Despite the security's impressive 93.7% year-over-year lead, there is still some hesitancy amongst analysts, which could lead to price-boosting upgrades down the line. Of the 18 in coverage, 10 say "buy" or better, while eight say "hold" or worse. Plus, the 12-month consensus price target of $116.90 is a 3.2% discount to current levels.