Tile Shop Hldgs, Inc. (TTS): Your Next Big Winner in Home Improvement

A picture is worth…

This month I was doing my three-month review, and decided that this story had even more to it than initially met the eye.  Looking at a map of their current stores, one thing jumps out at me:

Image:  http://www.tileshop.com/storelocator/index.aspx?found=none

There are almost no stores in the traditional ’tile belt’ — the hot, often sandy states in the deep south and southwest, where tile is the choice for flooring.  Tile feels cooler in hot weather, and it is easy to sweep up the sand tracked in from the beach, or the back yard. In other words, the Tile Shop Hldgs, Inc. (NASDAQ:TTS) has yet to enter what I would consider its prime markets!  A significant growth catalyst is hidden (in plain sight) in their expansion plans.  When they begin building distribution centers and retail stores westward and southward, I would expect per-store revenue to be even greater than their already uber-profitable stores in the midwest and northeast.

The chain is expecting to grow from the current 70 stores to between 400 – 600 (depending on who you ask!).  All other things being equal, that should lead to a nice price multiple.  But, it appears that all other things are not equal.  The planned expansion is into ’tile territory’, which should boost the company’s same-store stellar results even more.  This potential catalyst was enough to convince me to triple my holding in the Tile Shop Hldgs, Inc. (NASDAQ:TTS).

Perhaps you are intrigued enough to do your own homework on this company, and maybe even invest in it.  I expect that the experienced management team will succeed in leading this company to be a nation-wide chain of highly-profitable stores, and in the process, reward those of us who invest in the shares handsomely.

James Kirtley owns shares of Tile Shop Holdings. The Motley Fool recommends Tile Shop Holdings. The Motley Fool owns shares of Tile Shop Holdings.

The article Your Next Big Winner in Home Improvement originally appeared on Fool.com.

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