Best Buy's trading history suggests rally can continue into Black Friday and beyond

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Best Buy stock hit an all-time high — here's why it could go higher
Key Points
  • Best Buy shares are at an all-time high and up more than 50% year-to-date after it posted strong earnings and raised its full-year forecast.
  • Best Buy CEO Corie Barry said she is "excited" about the electronics retailer's holiday plans.
  • The past decade of stock market trading history suggests the surge can extend through the holiday shopping season.

Best Buy got a big jump ahead of Black Friday, and the start of the holiday shopping season may not be the only tailwind that keeps shares of the electronics retailer moving higher.

Best Buy spiked by 10% on Tuesday after it beat Wall Street expectations for the third quarter, including higher-than-expected same-store sales, and raised its full-year forecast.

The surge brought Best Buy to an all-time-high stock price and a year-to-date gain near-55%, more than doubling the YTD gain in the S&P 500.

The positive momentum could continue through the holidays, according to a CNBC analysis of Kensho, a hedge fund trading analytics tool. A month after moves of a similar magnitude — which have occurred 10 times in the past decade — has shown that the bullish trend in Best Buy shares tends to continue.

The stock adds another 2.3%, trading positively 70% of the time. Its success with consumers has also been a good sign for the broader U.S. stock market, with the S&P 500 posting a similar gain in these time periods and positive 90% of the time.

Retail earnings season has seen its share of winners and losers, but on Tuesday retailers rose broadly after Best Buy's results.

The SPDR S&P Retail ETF (XRT) climbed 0.6%, but for the year Best Buy has left the sector in the dust, with XRT posting a gain of 9%.

Best Buy CEO Corie Barry — who took over in April, replacing Hubert Joly, now executive chairman, who had orchestrated a turnaround after years of losing business to online retailer Amazon — said on the Tuesday earnings call that the retailer is "excited" about its holiday plans, which include next-day delivery on thousands of items with no membership or minimum purchase required, a move it first announced in October to match the threat from Amazon.

Domestic online revenue of $1.4 billion increased 15% on a comparable basis, primarily due to higher-average-order values, Best Buy stated in its earnings release. As a percentage of total domestic revenue, online revenue increased approximately 180 basis points to 15.6% vs. 13.8% last year.

Barry also has said she will be doubling down on strategies first initiated by Joly.

Charlie O'Shea of Moody's told CNBC on Tuesday that Best Buy's holiday season setup has positioned the company to continue as a top performer in retail.

"Best Buy's raising of earnings guidance for Q4 in the face of already cutthroat promotional activity is a reflection of a high level of confidence in its holiday strategy," O'Shea said.

Black Friday marks the start of the holiday shopping season, and expectations are high. The National Retail Federation forecasts that holiday sales during November and December will grow 3.8% to 4.2% over last year.

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VIDEO1:4101:41
Despite earnings misses, retailers like Kohl's could see a Black Friday...
Key Points
  • Some big-name retailers, like Home Depot and Kohl's, have been hit hard after recent earnings reports.
  • Over the past five years, the S&P 500 Retailing Index, as tracked by the SPDR S&P Retail ETF, tends to perform well in the week leading up to Black Friday, and Home Depot is among the group's outperformers.