That makes Select Comfort, surprisingly, the best bargain by far in the shrinking mattress segment. An acquisition last year left only Tempur-Pedic International Inc. (NYSE:TPX) and Mattress Firm remaining to contend with Select Comfort, and at present both have P/E’s more than twice as high as that of the maker of Sleep Number beds. This is a bit surprising, as the last time I examined Tempur-Pedic, it was the best value, and part of that rationale was that its growth rates were reportedly lower than Select Comfort Corp. (NASDAQ:SCSS)’s. How the tables have turned.
My fellow Fool Michael B. Lewis notes that the sector is particularly susceptible to any perceived demand slowdown, and that it’s likely to be a bumpy ride for investors over the next few months. Everyone needs a place to lay their head, but Select Comfort and Tempur-Pedic International Inc. (NYSE:TPX) are both premium brands in a sector that hasn’t yet managed to convince the world that it’s really worth spending more on something in which you spend roughly a third of your life. Housing growth tends to translate into a bedding boom, but Select Comfort Corp. (NASDAQ:SCSS) has a massive market of coiled-spring mattress owners waiting to be convinced to trade up. That argument is one that shareholders hope the company can make sooner rather than later.
Putting the pieces together
Today, Select Comfort has some of the qualities that make up a great stock, but no stock is truly perfect. Digging deeper can help you uncover the answers you need to make a great buy — or to stay away from a stock that’s going nowhere.
The article Is Select Comfort’s Stock Destined for Greatness? originally appeared on Fool.com and is written by Alex Planes.
Fool contributor Alex Planes has no position in any stocks mentioned. The Motley Fool owns shares of Tempur-Pedic.
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