If you have been following Bed Bath and Beyond (NASDAQ: BBBY) stock over the last few years, you know that investors have not treated the stock well. The stock price has been trending down since mid-2015 and since mid-2017, the price has essentially been flat.

Most of this is due to the fear of Amazon. If you listen to analysts, it seems as though Amazon is the only option any more for every single thing. In 5 years, there will be no more retail stores, no more pharmacies, nothing. Amazon will control everything.

Call me a skeptic, but I don’t think Amazon is going to take over the world. And as a result of this, I think the fears investors have in Bed Bath and Beyond are unfounded. This isn’t to say the company doesn’t face stiff competition. But there is a lot of hope with this company. A lot more than what many people are talking about.

Looking At Where Bed Bath And Beyond Is Now

Bed Bath and Beyond just released earnings and they weren’t that bad. Earnings per share came in at $1.48, beating estimates by $0.08. Revenues were up 5% versus the same period last year, at $3.7 billion, beating estimates by $30 million.

But the stock tanked. Why? It’s because the company lowered guidance through 2019, which spooked investors. But this pullback in the stock price is a golden opportunity for savvy investors. Here is why.

Why I Like Bed Bath And Beyond

First, same store sales, while not great, aren’t as bad as experts thought. The estimates were for same store sales to drop 2.3%. They only dropped 0.6%. While a drop isn’t good news, the decline is drastically less than expected. This tells me that experts are overly negative on the stock.

Second, the company raised their dividend and are still working through a share buyback program. Both of these should provide some short term support for the stock price.

Finally, there is Toys R’ Us. What does this company have to do with Bed Bath and Beyond? Toys R’ Us is shutting down, which includes Babies R’ Us. Bed Bath and Beyond owns buybuy Baby. This is huge for Bed Bath and Beyond as it will drive a lot more traffic to their stores.

Here is why. When shopping for baby products, you have 3 tiers:

• Low end: Walmart, Target
• Mid range: Babies R’ Us, buybuy Baby
• High end: Pottery Barn

There are a ton of people that shop in the mid range area. I am a perfect example of this. We are expecting our second child and need furniture, gear, clothes, etc. We were shopping at Babies R’ Us until we heard they were closing their doors.

We looked at furniture from Target and Walmart and it was junk. Cheaply made that wasn’t meant to last. Pottery Barn is way too expensive. The only other option is buybuy Baby.

Their prices are in line with Babies R’ Us and they offer 20% coupons just like Bed Bath and Beyond does. And they will be picking up some exclusive lines that Babies R’ Us sold. For example, Baby Cache furniture is now in buybuy Baby.

The result is a huge potential for Bed Bath and Beyond.

Final Thoughts

Bed Bath and Beyond stock isn’t going to the moon anytime soon. But I think investors are overly negative on the stock. I feel it has major upside when you look at buy Baby picking up baby registries and the mid range buyers like myself.

Now is a great time to slowly begin a position and adding shares over time in this company.