1 of the Biggest Winners of a U.S.-China Trade Deal Could Be This Unlikely S&P 500 Stock

U.S. stocks surged Monday as President Trump’s comments eased fears of a sudden jump in China tariffs. The S&P 500 ($SPX) rallied about 1.5% and the Nasdaq ($NASX) 2.2% to reverse Friday’s losses.

Best Buy (BBY) led the advance among large-cap names; its shares jumped roughly 10% to $77.45, making it one of the top S&P 500 gainers on the day. The pop reflects Best Buy’s heavy reliance on imported goods, meaning lower tariffs or smoother trade flows could significantly ease cost pressures and boost margins. After shares surged this week on easing trade rhetoric, analysts believe Best Buy could emerge as one of the stealth winners of a renewed U.S.-China agreement.

Here’s why this under-the-radar S&P 500 stock deserves a closer look.

Based in Richfield, Best Buy is a multinational consumer electronics and appliances retailer. It operates over 1,100 stores in the U.S. and Canada (plus online platforms), selling products from TVs and laptops to home appliances. Its brands include Geek Squad tech support, Magnolia Audio/Video, and Pacific Sales. The company is a Fortune 500 firm and a member of the S&P 500, with 2025 annual revenue of around $41.5 billion.

Valued at around $16 billion by market cap, Best Buy’s stock has underperformed the broader market so far in 2025, roughly 10% down year-to-date (YTD). The underperformance reflects lingering headwinds. Consumers remain cautious on big-ticket tech purchases amid inflation and uncertainty from tariffs. Monday’s trade news relief offered a notable bounce, but BBY still trails many growthier S&P names.

On a valuation basis, BBY looks pretty attractive. Its EV/sales ratio of 0.44 is significantly cheaper than the sector median of 1.39, indicating a potentially undervalued stock. However, its price-to-book (P/B) ratio of 5.16 is notably higher than the sector median of 2.83, reflecting a more expensive aspect of the stock.

Moreover, Best Buy offers investors a forward dividend yield of 5.4%, reflecting a solid income return compared to many S&P 500 peers. The company pays an annual dividend of $3.80 per share, supported by a payout ratio of roughly 60%.

In late August, Best Buy beat Wall Street’s fiscal second-quarter revenue and profit estimates but left its full-year outlook unchanged.

The retailer reported adjusted EPS of $1.28 versus $1.21 expected and revenue of $9.44 billion versus $9.24 billion. Despite this beat, net income fell to $186 million, or $0.87 a share, from $291 million, or $1.34, a year earlier.

BBY also demonstrates strong profitability with a high asset turnover ratio of 2.69 compared to the sector median of 0.98. This suggests efficient use of assets to generate revenue, highlighting robust operational efficiency.

Management said it is “trending toward the higher end of our sales range” while noting tariff uncertainty could still weigh on margins and consumer behavior. The company kept fiscal-year revenue guidance at $41.1 billion to $41.9 billion and adjusted EPS at $6.15 to $6.30, down from prior targets. Comparable sales are forecast to be roughly flat, in a range of a 1% decline to a 1% increase.

Chief Financial Officer Matt Bilunas cautioned the retailer may see a slowdown in October as shoppers hold out for holiday deals, a dynamic that could pressure third-quarter trading.

Best Buy pointed to a solid back-to-school selling season and the recent launch of a third-party online marketplace as bright spots that may support sales momentum.

Several recent news items have been positive for Best Buy.

In July 2025, Best Buy partnered with IKEA U.S. to create shop-in-shop displays for kitchens and laundry rooms in select Best Buy stores. Starting this fall, 10 stores in Florida and Texas will feature a 1,000-sq.-ft. IKEA design center with appliances, blending Best Buy’s tech and IKEA’s furniture. This is aimed at boosting traffic and linking appliance purchases to home design.

Also in the summer, Best Buy launched a new online marketplace. Working with software from Mirakl, the retailer added hundreds of new brands and categories (from cookware and furniture to toys and Blu-ray movies) to its e‑commerce site. This “tentpole” initiative triples the assortment in some categories, positioning Best Buy more like Walmart (WMT) and Target (TGT) in online choice.

However, on the negative side, tariff uncertainty remains a concern. Best Buy has already warned that new China tariffs will hurt margins, even as it has maintained full-year guidance. CEO Barry noted that customers remain price‑sensitive (“deal-focused”) under high inflation. The company has been raising prices on some products to offset tariffs. So far, Best Buy’s supply chain diversification and some price hikes have blunted the impact, but analysts say U.S. retailer margins will fully feel any 15-20% China tariff.

Analysts have mixed views on Best Buy following its latest earnings report. Jefferies reaffirmed a “Buy” rating and lifted its 12-month price target from $88 to $95, pointing to optimism around holiday demand, especially in gaming and computing. Goldman Sachs also maintained a “Buy” with a similar $95 target on BBY stock.

On the cautious side, Bank of America reiterated a “Sell” rating with a $60 target, citing pressure on margins and limited growth catalysts. Wedbush and J.P. Morgan are more neutral, with targets in the mid-$70s to high-$80s, while Telsey and UBS each see shares reaching around $90.

Overall, the average analyst target sits near $80, reflecting a “Moderate Buy” consensus. That implies a modest 2.5% upside from current levels, though the most bullish estimate of $90 suggests BBY stock could climb as much as 15% if optimism plays out.

On the date of publication, Nauman Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com