According to a court filing yesterday, Overstock.com (OSTK) has won a bid to purchase the assets of failed home goods store Bed Bath & Beyond (BBBYQ). The latter declared Chapter 11 bankruptcy in April and is still set to close down its physical storefronts by July.
Overstock.com spent $21.5 million to purchase the assets, including patents, logos, corporate names, and perhaps most importantly, business data. The deal does not include individual brands under Bed Bath & Beyond, such as the intriguing Buy Buy Baby infant and kids retailer. A separate auction for these brands will be held next week.
While a court hearing still needs to approve this acquisition, this could be a profound play for Overstock.com. The company has primarily earned its reputation through selling high-ticket items online – including couches, desks, and more.
But since the pandemic, they’ve begun selling more and more appliances and home decor items. Throughout that timeframe, Overstock.com has been just one of many companies trying to earn favor with Bed Bath & Beyond’s vendors and customers.
While Overstock.com declined to comment on this news, the market echoed its excitement for the deal by sending OSTK shares more than 22% higher. They reached beyond $26/share, the company’s highest point so far this year. This big boost only adds to what was already a strong, positive price trend forming over the past month – as the stock is up nearly 37% in that timeframe.
That being said, is this a good opportunity to buy OSTK? We’ve taken a look through the VectorVest stock analyzer to see what opportunity – if any- exists. And we’ve got three things we want to show you to help you determine your next move with this stock.
While OSTK Has Poor Upside Potential and Safety, the Timing is Excellent For This Stock
The VectorVest system helps you find winning opportunities on autopilot through a proprietary stock-rating system. It’s outperformed the S&P 500 by 10x over the past 20 years and counting. The way it works is by giving you all the insights you need to make calculated, confident decisions in just 3 simple ratings.
These are relative value (RV), relative safety (RS), and relative timing (RT). Each of these sits on its own scale of 0.00-2.00, with 1.00 being the average. Based on the overall VST rating for a given stock, the system issues a clear buy, sell, or hold recommendation - at any given time. As for OSTK, here’s what you need to know:
- Poor Upside Potential: The RV rating compares a stock’s long-term price appreciation potential (projected 3 years out) and AAA corporate bond rates & risk. And right now, OSTK has a poor RV rating of 0.55. What’s more, the stock is overvalued - with a current value of just $12.27.
- Poor Safety: In terms of risk, OSTK has poor safety as well - with an RS rating of 0.78. This is derived through a detailed analysis of the company’s financial consistency & predictability, debt-to-equity ratio, and business longevity.
- Excellent Timing: This is where things get interesting - because despite all this, OSTK has an excellent RT rating of 1.41, suggesting a strong positive price trend has taken hold. This rating is based on the direction, dynamics, and magnitude of the stock’s price movement day over day, week over week, quarter over quarter, and year over year.
The overall VST rating of 1.03 is fair - just above the average. Is it enough to earn the stock a buy, though? Or do the poor upside potential and safety outweigh excellent timing?
Don’t play the guessing game or make a decision based on emotion. Get a clear answer on what you should do next through a free stock analysis at VectorVest today!
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VectorVest advocates buying safe, undervalued stocks, rising in price. As for OSTK, the Bed Bath & Beyond acquisition has bolstered the excellent timing this stock already had. But while the initial reaction to OSTK has been positive, the stock does still have poor upside potential and safety.
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