Step 4: Check the company's financial health. Before investing in any company, you want to make sure it's in good financial shape. A quick way to check is to look at where it falls on the USA TODAY Stock Meter, which ranks stocks from conservative (1) to aggressive (5). Best Buy scores a solid 2.2 here. You can get a Stock Meter score for almost any stock by going to money.usatoday.com and putting the stock's ticker symbol or name into the Get a Quote box.
The bottom line?
Best Buy is fairly well positioned to profit from the nation's infatuation with electronic gadgets. When it comes to physical stores that sell electronics, Best Buy is often the first step for shoppers. However, the threat from online retailers cannot be underestimated, since tech shoppers are infamously price sensitive.
Putting the company's fundamentals aside for a moment, the stock is somewhat problematic. The vicious ups and downs seem extreme given the fact the company is a retailer. Finally, by investing in Best Buy you're betting the consumer will continue to spend in the face of $5 a gallon gasoline, rising unemployment and a weak housing market. Unless you think you can time the market, which few if any investors can do, there are just aren't that many reasons to buy Best Buy.
Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at firstname.lastname@example.org. Click here to see previous Ask Matt columns.