Now that Senator Barack Obama has turned into President-elect Barack Obama, I feel that the retail sector needs to be looked at. And one of the better ideas out there just might be Best Buy (NYSE: BBY).
Here's my thinking. Obama seems to be a Democrat who, whether he wants to promote this or not, is into wealth redistribution. I believe he will do what he can to increase the taxes on wealthy individuals and lower them on not-so-wealthy individuals. Furthermore, I anticipate more stimulus checks under his administration. I don't think that the economy is going to get better overnight once he takes office in January, and I would imagine that he'll want to send more money to the masses to see if our consumer culture might be able to save the country from its current financial mess by spending freely. Since Wall Street fat cats have been reaping huge bonuses, I think an Obama administration will see fit to spread wealth to those who don't live in mansions built on the failed promise (and premise for that matter) of mortgage-backed securities.
Under an Obama administration, non-wealthy individuals may begin to feel wealthier. And they will spend. Why will Best Buy prosper because of this? I think if consumer confidence increases due to a positive wealth effect, then an electronics chain that has a lot of brand equity should do well. People might be in the mood to upgrade their television sets, buy a new laptop, purchase a bunch of video-game software, replace an aging appliance, etc. Of course, one could argue that Wal-Mart (NYSE: WMT) or Target (NYSE: TGT) would benefit from Obama just as easily as Best Buy would. I can see that. But the reason I'm singling out Best Buy is that I believe that tech products might be the retail category that receives the biggest boost. Since this electronics chain has a reputation for being an expert in the field, it would seem logical that people will gravitate toward its locations. And it certainly is doing a lot better than Circuit City (NYSE: CC).
Now that the election is over and Obama is set to take leadership of the country, I think retailers might see a pop. And Best Buy's stock, which has been knocked quite a bit this year, is in a decent position to reap some capital appreciation. Of course, it's up to management to take full advantage of a shift in consumer sentiment under the new administration. Nothing's free in this world, so Best Buy can't take anything for granted; it'll have to up the marketing ante and compete accordingly.
No matter what, though, I do see good things for Best Buy after Obama starts promoting his philosophies vis a vis taxes and corporate governance. Like I say, if the consumer feels that more money might be coming her way, then her confidence will go up, and it might be time for a new computer. And that's where Best Buy comes in. In many ways, it's an obvious pick.
Disclosure: I don't own any company mentioned; positions can change at any time.