Judging from the stock market in recent months, one would think that every consumer related area is extremely weak. The worst performing groups by far this year have been consumer credit focused financials and retail. I continue to bottom fish in these areas because the stocks are pricing in some very dire profit outlooks, which I don't entirely agree with.

Results this morning from Best Buy (BBY) seem to support the claim that the consumer is not in as bad a shape as many would have you believe. In case you missed it, Best Buy reported earnings (for the quarter ending September 1st) of 55 cents per share, an impressive 11 cents above estimates of 44 cents. Sales grew 15% with comps rising 3.6%. The company now expects full year earnings to be in the upper half of guidance ($3.00 to $3.15) so we're likely looking at 2007 profits of around $3.10 per share.

Best Buy stock has been hit hard, closing yesterday at $44+ per share. I think the stock is attractive in the mid forties, as I have written about before (Best Buy Looks Attractive), given a 2007 P/E of 14. Investors are really going to focus on 2008 as we close out this year, and estimates are nearly $3.60 for next year. Should a leading retailer growing its business 15% really trade at 12 times forward earnings? Maybe if the consumer was really, really hurting, but today's results from Best Buy do little to support that argument.

Full Disclosure: Long shares of Best Buy at the time of writing