Bed, Bath & Beyond Is Safe, Strong & Cheap

The key takeaway in my Ford (F) profile Tuesday was its weak financial condition and lack of earnings predictability. But Bed Bath & Beyond (BBBY) is almost Ford's exact opposite. It is completely debt free, has no defined benefit pension plan to worry about, merits Value Line's highest rating for financial strength, and earnings estimates have a high confidence factor.

The only relatively poor grade comes in the "price growth persistence" category, which is a reflection of the very high valuation that it has commanded. The shares touched $37.90 in 2002 when full-year earnings per share came in at $1. It's no wonder that price-to-earnings compression occurred from an unsustainable 38 multiple. That factor alone caused less-than-spectacular price action in the shares, not poor operating results....209 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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