Bed Bath & Beyond Reports in Recovery Mode

Bed Bath & Beyond Inc. (BBBY), the major retailer of products for the home including bed sheets, bath soaps and beyond to kitchenware, is in recovery mode at 21.5% above its 2018 low of $16.52 set on May 9. Even so, the stock is in correction territory at 16.7% below its 2018 high of $24.08 set on Jan. 24. The stock closed last week at $20.07, down 8.7% year to date.

Analysts expect Bed Bath & Beyond to post earnings per share of 33 cents when the company reports results after the closing bell on Wednesday, June 27. When the stock traded as low as $16.52 on May 9, it was a 10-year low, implying that investors are not expecting blow-out numbers. However, the stock rebound since May 9 could be an indication that same-store sales and the retailer's online shopping experience may be improving. Following the earnings report delivered on April 11, the stock slumped to its May 9 low, indicating that the worst may be in the rear-view mirror. The stock appears cheap enough to take a risk given the P/E ratio of 6.58 and dividend yield of 3.19%. (See also: Bed Bath & Beyond Stock Still Too Cheap to Ignore.)

The daily chart for Bed Bath & Beyond

Shares of Bed Bath & Beyond have been below a "death cross" since the week of June 16, 2015, when the stock closed at $69.68. A "death cross" occurs when the 50-day simple moving average falls below the 200-day simple moving average and indicates that lower prices lie ahead. Note that the stock is now above its 50-day simple moving average of $18.21 and below its 200-day simple moving average of $21.25. My monthly value level is the horizontal line on the chart at $17.32.

The weekly chart for Bed Bath & Beyond

The weekly chart for Bed Bath & Beyond is positive, with the stock above its five-week modified moving average of $19.13. The stock is well below its 200-week simple moving average at $46.14, which is the stock's "reversion to the mean," last crossed during the week of July 24, 2015, when the average was $66.93. The 12 x 3 x 3 weekly slow stochastic reading ended last week at 40.75, up from 29.65 on June 15.    

Given these charts and analysis, investors should consider buying the stock on weakness to my monthly value level of $17.32 and reducing holdings on strength to the 200-day simple moving average of $21.25. (For more, see: Wall Street Slashes Outlook on Bed Bath & Beyond.)