In this piece, we will take a look at 11 best furniture-related stocks to buy now.
The outbreak of the coronavirus pandemic and the resulting devastation of industries all over the globe pummeled several sectors to historic lows. Now that the pandemic is over, and markets are open, several sectors have started to recover, and one of these is the furniture industry.
A research report from Fortune Business Insights estimates that the furniture market was worth $494 billion in 2021 and from then to 2028 it will grow at a compounded annual growth rate (CAGR) of 5.5% to sit at $720 billion. Behind this growth will be factors such as the growth in remote working in the aftermath of the pandemic, as more people start to shop for desks and other items. Additionally, Fortune Business Insights also estimates that marketing campaigns by companies such as Ikea will further stimulate demand.
Another report, this time from Zion Market Research, outlines that the global furniture market was worth $595 billion in 2021, and it will grow at a CAGR of 5.6% to be worth $722 billion by 2028 end. It also attributes this growth to trends such as ready-made furniture being easily available, and better deals being provided by retailers.
Finally, Mordor Intelligence, which assigns another 5% CAGR for the furniture industry until 2026, also believes that the growth in demand will be fueled by more populations entering the middle class and choosing furnishings for their living spaces. It adds that the growth will be led by China and Australia and that the market is highly fragmented with a lot of players vying for attention.
In today’s piece, we will take a look at some of the promising furniture stocks, with some top picks being The Lovesac Company (NASDAQ:LOVE), Arhaus, Inc. (NASDAQ:ARHS), and Kimball International, Inc. (NASDAQ:KBAL).
Photo by Julien-Pier Belanger on Unsplash
Our Methodology
In order to pick out the top furniture stocks, we took a broad look at the industry to determine which players are performing well and in line with market trends and demands. They were then briefly analyzed through their financials and ranked through Insider Monkey’s Q2 2022 survey of 895 hedge funds.
Best Furniture-Related Stocks to Buy Now
11. Bassett Furniture Industries, Incorporated (NASDAQ:BSET)
Number of Hedge Fund Holders: 8
Bassett Furniture Industries, Incorporated (NASDAQ:BSET) is an American company that sells residential furniture in its home country and all over the globe. The firm sells its products through both its own stores and stores licensed out to licensees. The company is headquartered in Bassett, Virginia.
Bassett Furniture Industries, Incorporated’s latest quarter saw the firm grow its revenue by 12.5%, at a time when the housing industry was weakening due to high mortage rates spurred by the Federal Reserve’s interest rate hikes. This quarter cemented the recent growth story, as the one before it saw Bassett Furniture Industries, Incorporated grow its EPS by a remarkable 43% annually, as it smashed analyst estimates out of the park.
Furthermore, Bassett Furniture Industries, Incorporated’s management appears optimistic about the company’s future, as it rejected a $21/share acquisition offer in October 2022. The stock closed at $18.05 yesterday, implying that there’s some growth in it. Bassett Furniture Industries, Incorporated pays a 16 cent dividend for a 3.54% yield, and its shares have grown by 4.75% this year, in the backdrop of inflation.
By the end of this year’s second quarter, eight out of the 895 hedge funds surveyed by Insider Monkey had invested in the company.
Bassett Furniture Industries, Incorporated’s largest investor in our database is Mario Gabelli’s GAMCO Investors which owns 678,483 shares that are worth $12 million.
Along with Arhaus, Inc., The Lovesac Company, and Kimball International, Inc., Bassett Furniture Industries, Incorporated is a top furniture stock.
10. HNI Corporation (NYSE:HNI)
Number of Hedge Fund Holders: 10
HNI Corporation (NYSE:HNI) sells workplace and residential furniture. Its products include office furniture such as storage, tables, and freestanding systems, and residential products such as fireplaces, stoves, and other accessories. The firm is headquartered in Muscatine, Iowa.
HNI Corporation’s second fiscal quarter saw the firm grow its revenue by 22% and earnings per share (EPS) by 30% annually. The revenue growth was fueled by both its office and residential businesses, which posted 18% and 21% growths, respectively.
At the same time, HNI Corporation also reported a strong order flow, with the orders for its office products growing by 4% and for the residential products by 14%. HNI Corporation pays a 32 cent dividend for a 3.62% yield, and ten out of the 895 hedge funds polled by Insider Monkey for their Q2 2022 holdings had held a stake in the company.
Out of these, Ken Griffin’s Citadel Investment Group is HNI Corporation’s largest investor. It owns 175,562 shares that are worth $6 million.
9. American Woodmark Corporation (NASDAQ:AMWD)
Number of Hedge Fund Holders: 11
American Woodmark Corporation (NASDAQ:AMWD) is an American company that sells a variety of different products for the remodeling and construction of offices and homes. The firm has dozens of brands in its portfolio, and it is headquartered in Winchester, Virginia.
American Woodmark Corporation reported 27% annual revenue growth in its first fiscal quarter, with a tally of $543 million beating analyst estimates by a wide margin. The company is also expected to weather the inflationary and housing market storms that have been brewing up, as it has a strong backlog that should last until the end of the fiscal year 2023 – at a time when the broader furniture industry is expected to witness a slowdown due to high mortgages.
Loop Capital increased American Woodmark Corporation’s share price target to $49 from $47 in September 2022, stating that the company posted strong sales and revenue growth in its latest quarter. Insider Monkey studied 895 hedge fund holdings for this year’s second quarter and found out that 11 had bought the company’s shares.
American Woodmark Corporation’s largest investor is Richard S. Pzena’s Pzena Investment Management which owns 870,299 shares that are worth $39 million.
8. Sleep Number Corporation (NASDAQ:SNBR)
Number of Hedge Fund Holders: 12
Sleep Number Corporation (NASDAQ:SNBR) is an American company that designs and sells beds, pillows, sheets, and other sleeping products. The firm is headquartered in Minneapolis, Minnesota.
Sleep Number Corporation has close to 700 retail locations across the U.S., which provide the firm with a strong footprint. The firm’s latest quarter saw it grow its revenues by 13%, with the growth driven not only by its store expansion throughout this year, but also by larger volumes.
Sleep Number Corporation’s price to earnings (P/E) ratio of 13.9 and its enterprise value to operating income (EV/EBITDA) ratio of 10.9 are among the highest in its peers, implying that the market expects it to do a lot more than its income statements suggest. As part of their second quarter of 2022 holdings, 12 out of the 895 hedge funds polled by Insider Monkey had bought the company’s shares.
7. Haverty Furniture Companies, Inc. (NYSE:HVT)
Number of Hedge Fund Holders: 12
Haverty Furniture Companies, Inc. (NYSE:HVT) is an American residential furniture company. The firm sells furniture, mattresses, upholstery, and eclectic looks. It is headquartered in Atlanta, Georgia.
Haverty Furniture Companies, Inc. has a fortress balance sheet with no debt and $144 million in cash and equivalent holdings – providing it with a solid footing to weather a potential recession. Another key factor is frequent share repurchases, which can prop up its share price even as market sentiment sours.
Haverty Furniture Companies, Inc. pays a 28 cent dividend for a 4.3% yield. Out of the 895 hedge funds surveyed by Insider Monkey for their Q2 2022 investments, 12 had owned a stake in the company.
Haverty Furniture Companies, Inc.’s largest investor is Jim Simons’ Renaissance Technologies which owns one million shares that are worth $23 million.
6. Ethan Allen Interiors Inc. (NYSE:ETD)
Number of Hedge Fund Holders: 13
Ethan Allen Interiors Inc. (NYSE:ETD) is an interior design company and manufacturer and seller of home furnishings. The firm is headquartered in Danbury, Connecticut, and it sells a host of products which include upholstery items, home office furniture, drapery items, and home accent hardware.
Ethan Allen Interiors Inc. is facing high demand for its products alongside an equally strong pricing power, which saw the firm grow its revenue by 19% during its fiscal year 2022 despite shutting down stores and increasing prices at the same time. The strong demand is also evident in its 14% retail order growth and 17% warehouse order growth during the same fiscal year
Ethan Allen Interiors Inc. is also among the cheapest stocks in its peer list, courtesy of its low P/E and EV/EBITDA ratios. The company pays a 32 cent dividend for a 5.6% yield, and 13 out of the 895 hedge fund holdings studied by Insider Monkey during this year’s second quarter had mentioned the stock.
Out of these, Chuck Royce’s Royce & Associates is Ethan Allen Interiors Inc.’s largest investor through a $6.8 million stake that comes courtesy of 338,803 shares.
Ethan Allen Interiors Inc. joins our list of top furniture stocks, with some other notable picks being The Lovesac Company, Arhaus, Inc., and Kimball International, Inc..
5. Purple Innovation, Inc. (NASDAQ:PRPL)
Number of Hedge Fund Holders: 13
Purple Innovation, Inc. (NASDAQ:PRPL) is an American company that manufactures and sells a variety of products such as mattresses, pillows, bed frames, blankets, and duvets. The company is headquartered in Lehi, Utah.
Purple Innovation, Inc. signed an agreement with another furniture company earlier this year, through which it will significantly expand its retail presence in the U.S. by adding 636 stores to its portfolio. The company also has a strong balance sheet, through which it holds total assets of $625 million compared to $140 million of operating leases and long term debt obligations.
Wedbush increased Purple Innovation, Inc.’s share price target to $5 from $3.3 in September 2022, sharing that a recent buyout offer of $4.5 per share is still not enough, and is likely to be increased. By the end of this year’s second quarter, 13 out of the 895 hedge funds polled by Insider Monkey had owned the company’s shares.
Purple Innovation, Inc.’s largest investor is Christopher Shackelton and Adam Gray’s Coliseum Capital which owns 40 million shares that are worth $125 million.
4. The Lovesac Company (NASDAQ:LOVE)
Number of Hedge Fund Holders: 13
The Lovesac Company manufactures and sells furniture products such as foam beanbags, chairs, drink holders, fitted seat tables, and ottomans. The company is headquartered in Stamford, Connecticut.
The Lovesac Company has been growing its revenue by a compounded annual growth rate (CAGR) of 47.6% over the past five years, making it outpace most of the industry. The company’s strongest product is its Sactional, which provides buyers to create a wide variety of different furniture pieces simply by buying more pieces from the company instead of purchasing new products. This makes The Lovesac Company a rare furniture company with recurring revenue.
The Lovesac Company also likely has the strongest customer loyalty in the furniture industry, particularly due to the Sactional. The company’s fiscal year 2021 saw close to 46% of transactions come from repeat customers. Insider Monkey’s Q2 2022 survey saw 13 investors in the firm.
The Lovesac Company’s largest investor is Paul Marshall and Ian Wace’s Marshall Wace LLP which owns 514,193 shares that are worth $14 million.
3. Kimball International, Inc. (NASDAQ:KBAL)
Number of Hedge Fund Holders: 13
Kimball International, Inc. sells furniture products in the U.S. and globally under a host of different brands. These products include workstations, storage, headboards, vanities, and seating. The company is headquartered in Jasper, Indiana.
Kimball International, Inc.’s third fiscal quarter results revealed that the company grew its revenues annually by a strong 31%, which also ended up beating analyst expectations by 5.3%. The growth was driven by the company’s work and healthcare division reporting a whopping 41% annual growth. The company also expects to bring in $185 million in revenue by the end of this year.
Despite this, Kimball International, Inc. is trading at a relatively weak P/E ratio of 8.5x, implying that there is growth left in its stock price. The company also pays a 9 cent dividend for a strong 5.23% yield, and by the end of this year’s second quarter, 13 out of the 895 hedge funds had held a stake in it.
Kimball International, Inc.’s largest investor is Jim Simons’ Renaissance Technologies which owns 1.7 million shares that are worth $13 million.
2. La-Z-Boy Incorporated (NYSE:LZB)
Number of Hedge Fund Holders: 16
La-Z-Boy Incorporated (NYSE:LZB) is an upholstery furniture products manufacturer and distributor that is headquartered in Monroe, Michigan, the United States. Its products include recliners, sofas, and chairs.
La-Z-Boy Incorporated set a new record by the end of its first fiscal year when it reported an 8.7% operating margin for an operating income of $52.6 million. The quarter saw its retail function perform strongly, as sales through the channel grew by 30% annually.
La-Z-Boy Incorporated is also aiming for strong revenue growth for its fiscal year 2022, with management guiding a growth ranging between 23% and 25%. Insider Monkey’s Q2 2022 survey of 895 hedge funds saw 16 investors in the firm.
Out of these, Dmitry Balyasny’s Balyasny Asset Management is La-Z-Boy Incorporated’s largest investor. It owns 281,305 shares that are worth $6.6 million.
1. Arhaus, Inc. (NASDAQ:ARHS)
Number of Hedge Fund Holders: 16
Arhaus, Inc. is an American company that provides a host of products such as dining tables, sofas, chairs, consoles, coffee tables, and beds. The company is headquartered in Boston Heights, Ohio.
Arhaus, Inc. is one of the strongest growing companies in the furniture industry. The company grew its revenue by a whopping 57% in 2021, and if this isn’t enough, it plans to further grow revenue this year by another 50%. Additionally, this growth trend can be maintained in 2023 as well, as management estimates that the orders that the firm has received so far will not be cleared until mid-2023.
Arhaus, Inc. has a net debt of $214 million, which is 146% of its operating cash flow of $146 million in 2021. In simple terms, the debt can easily be funded by the operating cash flows and it de-risks the firm to an extent. As this year’s second quarter ended, 16 out of the 895 hedge funds polled by Insider Monkey had held Arhaus, Inc.’s shares.
Arhaus, Inc.’s largest investor is Jeff Osher’s No Street Capital which owns 1.6 million shares that are worth $7.2 million.
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This article is originally published at Insider Monkey.
