Best Buy’s CEO Is Selling Shares…Should You?

Best Buy has been up front about its competition against Target Corporation (NYSE:TGT) and Wal-Mart Stores, Inc. (NYSE:WMT). The mass merchants do offer goods at a low price, but they also offer lower quality. Best Buy’s niche is in the higher-end, higher margin segment of the electronics space and the company believes they service a different consumer than Target Corporation (NYSE:TGT) and Wal-Mart Stores, Inc. (NYSE:WMT). But, there has been a trend during the recession in the TV space that the consumer cares more about the size of the TV than the added functions, which is a big negative for Best Buy (Target Corporation (NYSE:TGT) has even acknowledged this point of differentiation).

Wal-mart is also looking to compete against Best Buy in the smartphone by introducing its own trade-in program. Best Buy already has had this program in place, and the smartphone business is Best Buy’s most profitable segment.

Overall, Best Buy Co., Inc. (NYSE:BBY) is trying to differentiate itself from these competitors, but the competition still has an edge of price on the low end, and in-home convenience on the high end. Either way, with the recent run-up in the stock, this competition is something that investors should take note of.

Conclusion
Considering the recent insider selling, increased competition, and headwinds coming in the back half of the year, investors should reevaluate the merits of an investment in Best Buy at these current levels. Best Buy’s stock price has had an incredible run this year, but it may not last much longer.

The article This Company’s CEO Is Selling Shares…Should You? originally appeared on Fool.com and is written by Shaun Currie.

Shaun Currie has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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