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Growth and Income Stocks: (BBY) (PETS)

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Best Buy (BBY)

It has been a challenging environment for most brick & mortar retailers due to the rising trend for online shopping but some retailers like Best Buy have been doing well.

They have improved their merchandize, marketing and in-store shopping experience over the past couple years. They have also increased focus on their online channel where sales grew 24% last quarter.

Best Buyis a Zacks Rank #2 (Buy) stock and the industry (Retail-Consumer Electronics) is ranked 17/265 (top 6%) as of now. They are trading at 11.7 times forward earnings, which is really attractive.

They delivered a huge beat earlier this year and in fact they have been beating the Zacks Consensus Estimates consistently. If you look at Price and EPS Surprise chart, you’ll see they haven’t missed since 2013.

They will report later this month and with an Earnings ESP of more than 7% they are expected to beat again. ESP is Zacks’ proprietary tool for determining which stocks have the best chance to surprise with their next earnings announcement.

Earlier this year, they announced a $1 billion share repurchase plan which will be executed over a two-year period and they also paid a special one-time dividend and increased their regular quarterly dividend by 22%. Their current dividend yield is 3.3%.

PetMed Express(PETS - Free Report)

PetMed Expressis the largest pet pharmacy in America. They operate as 1-800-PetMeds and deliver prescription and non-prescription pet medications, health and nutritional supplements as well as supplies for pets.

They market their products mainly on TV and online and consumers place orders online or on phone. More than 80% of their sales are generated on the website.

PETS is a Zacks Rank #1 (Strong Buy) stock. Trading at 18.7 times forward earnings, this stock isn’t really cheap like BBY, but the Growth Score is “A” and we like that.

They have beaten the Zacks Consensus Estimates in all of last four quarters with average quarterly positive earnings surprise of 7.3%.

They have a solid dividend yield of 3.7% as of now. They have been raising their dividends and had also increased earlier this year.


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