This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Market Preview: Holding Out for a 'Grand Bargain'

Stock quotes in this article: HPQ, BBY, SPY, GRPN, JPM, ^GSPC, ^DJI, ^IXIC

One observation that UBS offered up was that while the S&P 500 has doubled off its financial crisis low in March 2009, the forward price-to-earnings ratio that the index has been afforded has actually contracted, going from a peak of more than 15x early in the recovery to a multiple of 12x right now, a decline of roughly 20%.

"In our view, stock investors have been unwilling to 'pay up' for earnings results due to an exceptionally high level of uncertainty about the future direction of the economy and corporate profits," the firm said.

Since the uncertainty is as thick as ever right now -- Monday's rally aside -- investors may want to see more evidence that a grand bargain might be in offing before ponying up.

As for Tuesday's scheduled news, the holiday-shortened trading week will still see its share of high-profile earnings reports. Best Buy's (BBY) numbers are slated to hit the tape in the a.m. and Wall Street is looking for third-quarter earnings of 12 cents a share from the Minneapolis-based consumer electronics retailer on revenue of $10.73 billion.

All the back-and-forth about a potential buyout by Best Buy founder Richard Schulze hasn't translated to any appreciation in the stock, which is down more than 40% so far this year, hitting a 52-week low of $13.52 on Friday. The company, which enacted significant layoffs over the summer, continues to struggle to shake its rep as "Amazon's showroom."

Most recently Best Buy announced a management shake-up and warned of weak results for the third quarter in late October so expectations are pretty low headed into the print.

UBS, which has a neutral rating on the stock, lowered its 12-month price target to $14.50 from $16.75 on Monday.

"A lot of the mystery has been taken out of BBY's 3Q given its preannouncement and recent investor meeting," the firm said. "The focus will be on how the company is positioned for the holidays and recent trends. We are forecasting a -2% domestic comp and -85 bps of domestic GM gross margin erosion in 4Q, but a wide range of outcomes is possible, especially with BBY's new price match policy in place."

2 of 4

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,804.71 -238.19 -1.40%
S&P 500 1,946.16 -26.13 -1.32%
NASDAQ 4,422.0850 -71.3050 -1.59%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs