Best Buy stock looks to be in the position to enjoy short-covering tailwinds
Electronics retailer Best Buy Co Inc (NYSE:BBY) saw its stock rise to new highs in mid-December following a positive earnings release in November, rallying past previous record highs in the $85 region. The shares are holding just above this previous peak now, and a shift in sentiment could have them adding to their year-over-year gain of 66% and exploring uncharted territory once again.
Despite the technical and fundamental strength seen recently, many analysts remain bearish. In fact, the majority in coverage have "hold" ratings, leaving the door wide open for upgrades. Such bullish attention could bring more buyers to BBY.
Best Buy could also enjoy short-covering tailwinds, since short interest has been declining recently, down 14.6% in the last reporting period. With 3.4 days' worth of buying power still held by short sellers, based on average trading volumes, there's potential for a sustained short-squeeze on BBY.
Lastly, our recommended call has a leverage ratio of 7.11, and will double in value on a 13.6% gain in the stock.
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