Tempur Pedic Today's Sleeper Stock

Tempur Pedic

If you’re Tempur Pedic International Inc. (TPX), the best time of the day is indeed when it’s sleepy time down south. The Kentucky company best known for its luxury memory foam mattresses (67% of sales) had an unforgettable afternoon, coming in as today’s top stock on both the NYSE and Russell 1000 after rising 12.02% to a record high. This following a forecast for both first-quarter and annual sales which was well ahead of average analyst estimates. You could call it a bit of a sleeper development, coming as it does only one week after rival Sealy Corp (ZZ) announced an unexpected loss.

Last night Tempur took investors pleasantly by surprise in saying it expects Q1 earnings per share of between $0.67 and $0.68 on $325 million in revenue, easily surpassing Street consensus of only $0.58 and $290.5 million respectively. Going forward, full-year EPS guidance for all of 2011 in a range of between $2.80 and $2.95 also exceeded prior projections for the firm founded in 1989, the same year a Wall’s fall finally put Lenin (no not that one) to bed. It also sells assorted adjustable products, pillows (12% of sales), and the like via a network of furniture retailers, specialty stores, and online. Chiropractors and other medical end markets augment its core customer base of upscale consumers.

CEO Mark Sarvary hailed higher sales of a broader product portfolio, including its Contour label. Subsequently, several equity researchers have raised both estimates and price objectives. KeyBanc Capital took up their 12-month target by $8 to $62 and called the company a “compelling growth story.” Raymond James was even more aggressive at $65, a $17 increase on its previous fair value estimate.

Clearly, Tempur is the cat’s pajamas at the moment but what -- bedbugs aside -- could temper a share price surge which now stands at over 88% in a year? Revenue growth, while still strong, is nonetheless slated to slow from 2010′s breakneck 33% pace. Sales of premium mattresses, which represent roughly 50% of the overall addressable market, could also quickly feel an adverse impact from any consumer pullback. And ever rising commodity cost inflation is a big concern to counterbalance today’s ebullience. So WWJD? Well I can’t speak for Jesus but John, who regarded The Beatles as bigger in any event, would likely agree money never sleeps and to buy the stock. But on a pullback, he'd avoid any bouts of insomnia at current valuation levels.

Please see Confirmed: Adults Sleeping With Their Cell Phones and What Stocks Would Jesus Buy?

Blyth

If burning it at both ends leads to fatigue, you can always blame the country’s biggest candle maker for your sleepless nights. Shares of home fragrance and decorative accessories outfit Blyth, Inc. (BTH), based in the hedge fund haven of Greenwich Connecticut where Stepford Wives sleepwalk the Earth, surged 10.53% this afternoon. An earlier 14% bounce represented its biggest intra-day increase in a year. Fourth quarter per share earnings of $2.13 came in as expected at this provider of Martha Stewart-ish upscale knickknacks. For the full year, income increased 44% to $25.6 million, or $3.00 per share.

The company sells assorted upscale ornaments, photo albums, frames, and holiday cards, plus gourmet caffeinated offerings to multiple end markets including gift stores. They also own Walter Drake, where generations of Americans have gone catalog shopping for personalized address labels. (Not to mention eclectic “As Seen on TV” labels like Bacon Genie.) Other divisions include Colonial Candle of Cape Cod, whose chief competitors are privately-held duo S.C. Johnson and Yankee Candle. Blyth, founded in our Bicentennial year, also boasts a surprisingly sizable international presence. CEO Robert Goergen cheered investors by declaring “We anticipate profit growth in fiscal year 2012 across most Blyth businesses.”

What could cause the wax maker to wane? The “continued challenging macroeconomic environment” and anticipation of “conservative consumer discretionary spending.” It also operates in quite a commodified business, and a 9% decline in direct selling revenue -- to $211.5 million -- was a disappointment. Still, a week which began with the Huskies’ NCAA win is ending on a similarly upbeat note for the Constitution State.

Check out why a market technician might have concerns after today’s parabolic upside breakout in the candle maker at Candlestick Chart Analysis as a Confirmation Tool.

CVS Caremark

From Stepford Wives to Desperate Housewives. That creepy chemist on Wisteria Lane has long kept me away from the pharmacy counter but after today’s strong showing from CVS Caremark (CVS) I may want to revisit drugstores. It rose 2.06% after being boosted to Outperform from Market Perform by BMO Capital, where the analyst clearly likes it when push, and pill pushers, comes to shove. Dave Shove, the relevant researcher that is, who cited a solid retail business and profitable generic product introductions at its pharmacy benefits management unit. Should America’s biggest prescription drug provider opt to split itself up -- something which is all the rage in the current corporate world -- it could be worth upwards of $25 billion. The Rhode Island outfit, whose ultimate origins date to 1892, also owns the popular MinuteClinic walk-in care provider. Shove bumped up his 2011 and 2012 profit estimates and now projects CVS will earn $2.89 per share this year and $3.30 next. Skeptics point to declining core PBM operating income relative to rival Medco, something which has kept the shares underwater over the past year. But today’s lesson is don’t fight the tape... even when it’s invisible.

Clorox Corp.

If the three stages of grief are sad, mad, and Glad then trash bag maker Clorox Corporation (CLX) has got it all covered. (Iconic advice which also applies to you too, Gilbert Gottfried.) Shares in our headline downgrade fell 0.81% today, the consumer products powerhouse experiencing some serious melancholy after getting moved to Neutral from Overweight at JP Morgan. Higher resin prices and intense retailer concentration could soon start to weigh on shares of this 98-year old California company whose best known brands also include S.O.S., Liquid-Plumr, Tilex, Armor All, Brita, and Pine-Sol. A 3.16% dividend yield does pay investors to wait out a turnaround but till then, the company will continue to bat cleanup.


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