Key Takeaways
- Investing in Best Buy and Wayfair is “worth the risk,” JPMorgan said in a research note on retailers published Monday.
- Best Buy will likely see strong sales thanks to the Nintendo Switch and back-to-school shopping, analysts said.
- Meanwhile, Wayfair will likely be impacted by tariffs less than investors expect, the research team said.
Best Buy and Wayfair stock offer a healthy balance of risk and reward, JPMorgan said.
The companies aren’t among the safest investments highlighted in a retailer research note, but they are “worth the risk,” JPMorgan said Monday.
Business should pick up at the electronics retailer Best Buy (BBY), beginning in June, when pre-orders of Nintendo Switch show up in financial records, the note said. The momentum will likely carry over into July as consumers buy computers, tablets and phones during back-to-school shopping, they said.
Best Buy has integrated current tariffs into its guidance, which limits–but doesn’t completely eradicate–risks to its future earnings, JPMorgan said. Sales of non-computer merchandise could remain sluggish, analysts said, concluding that shares are “highly worth the risk-reward at this price.”
Shares were recently trading for roughly $67.40—down about 21% so far this year. Best Buy stock began declining in late February amid new tariffs, and has generally been ticking up since early April, when a number of “reciprocal” tariffs were delayed.
Wayfair (W) shares also appear to be undervalued, JPMorgan said. Misconceptions about how tariffs may impact the company appear to be weighing on its stock, the note said, adding that Wayfair operates a platform for buying furniture and home goods and doesn’t function like a traditional retailer.
Shares were recently selling for just shy of $41, but remain down nearly 8% this year.