BEST BUY AND RADIO SHACK

Best Buy and Radio shack

Table of Contents

Executive summary3

Stock Selection4

Industry, Company, and Competitor Descriptions6

Financial Analysis12

Financial Highlights (In US DOLLAR as of 02/28/2009)30

Conclusion36

References38

Best Buy and Radio shack

Executive summary

This assignment is based on the analysis of data of two companies. The companies are Best Buy and Radio shack. RadioShack Corp, formerly known as Tandy Corp, engages in the retail sale of consumer electronics through the RadioShack store chain and dealer/franchise outlets. Started in 1921 as a single retail and mail-order store selling radio equipment, the company today the #3 consumer electronics retail chain in North America, selling products in seven categories through nearly 7,200 stores: wireless communication, wired communication, radio communication, home entertainment, computer, power and technical, and personal electronics, toys, and personal radio. (Bear 1994)

In order to hedge interest rate risk Best Buy's could try to immunize the company's portfolio of assets and liabilities. This may prove to be less difficult if the firm would try to immunize portfolios or individual investments rather that the entire balance sheet. This is especially the case in an insurance company because of the risk that investing policyholder's money could fall and the company could fall short in the event of a payout. As a result the firm would have to draw down its reserves and net worth in order to meet the claim. So in theory, the best way for an insurance company to immunize would be by working with individual portfolios. But, this process is time consuming and costly. Instead of direct portfolio balancing, Best Buy's could take hedging positions in derivative securities markets such as futures and forwards markets. (Bathory 1987)

New technology has changed the world, Best Buy especially has benefited from this especially. It has repositioned Best Buy's operational all aspects of the word. Computers and computer based products control most if not all of Best Buy's it would not run as smoothly with out it. Computers control ordering from the supplers throws to distribution and store design. With out this technology expanding their stores would have been severely hampered. Best Buy group is successful company that managed to increase its profits, however to reach more markets and more patients has to develop sustainable strategy that improves current issues and forecast future trends in order to prepare and be ready follow them. (Adams 1998)

Stock Selection

Fundamental analysis is based on the premise that any security (and the market as a whole) has an intrinsic value, or the true value as estimated by an investor. This value is a function of the firm. s underlying variables, which combine to produce an expected return and an accompanying risk. By assessing these fundamental determinants of the value of a security, an estimate of its intrinsic value can be determined. This estimated intrinsic value can then be compared to the current market price of the security. Similar to the decision rules used for bonds, decision rules are employed for common stocks when fundamental analysis is used to calculate intrinsic ...