If the economy really is deteriorating as many fear, then there are numerous sectors poised to take even more hits.

In particular, firms with peripheral exposure to the real estate market -- namely office furniture makers, building material suppliers, and construction firms -- face significant hurdles. And within these groups are three names to avoid: HNI ( HNI), Vulcan Materials ( VMC), and Perini ( PCR).

The overall bearish theme is that these sectors are hurt in a slowing economy as office vacancies rise, commercial construction starts fall, and government spending on transportation infrastructure weakens.

While these stocks are at or near 52-week lows because of their close ties to the real estate slump, they haven't been truly hammered like other sectors, such as the homebuilders.

The stocks also aren't heavily shorted yet -- with each carrying a short interest of less than 12% of the float. So hedge funds are looking at these names as the next popular shorts.

The companies either declined to comment for this story or could not be reached for comment.

HNI's Office Trouble

In late November, Goldman Sachs downgraded the entire office furniture sector to "cautious." The worst name in the group is HNI, says the note from analyst Christopher Agnew, who rates the stock a sell.

"We believe HNI faces the stiffest headwinds (of the group) from a slowing U.S. economy," he wrote.

About 25% of the company's sales come from its Hearth business, which supplies fireplaces for homes. The rest of HNI's business involves supplying office furniture. The company bills itself as the world's second-largest office furniture maker.

In the fourth quarter, the national vacancy rate for office buildings inched up to 12.6% from 12.5% in the third quarter, according to data from Reis Inc. that was cited in a recent Wall Street Journal article. That was the first vacancy rate rise in four years, the paper said.

The last time office vacancies rose, the office furniture market came under severe pressure. From 2000 to 2003, the overall office furniture market shrunk by 36%, according to Goldman research.

The consensus estimates still have HNI increasing earnings per share by 7.4% to $2.62 in 2008. Agnew has the lowest estimates of all, projecting that earnings will fall 2% to $2.39. His target price is $31. Shares were recently trading around $30.

HNI is considered to have great management. The company was able to maintain its margins by cutting costs last year, but this strategy cannot keep earnings afloat forever.

"Cutting costs did so much, but now what happens with the top line?" says one institutional sales broker who is telling clients to short the name.

The bear thesis on HNI is that its revenue growth will weaken as the economy worsens. HNI's business is also tied to lower-end businesses more than competitor Herman Miller ( MLHR).

Vulcan Materials Crumbles

There are several reasons to be bearish on Vulcan Materials, a producer of construction aggregates such as crushed stone, rock asphalt, and sand and gravel.

Vulcan will suffer from weakened consumer spending and higher unemployment, which will put pressure on state revenue and force cuts in transportation spending, says Bank of America analyst Daniel Oppenheim. He rates the stock a sell and recently lowered his target price to $60 from $75. Shares closed Friday at $68.63.

Transportation spending has been robust in recent years as government revenue from sales and property taxes ballooned across the U.S. Now, bears believe that a weakened economy will create state revenue shortfalls.

"We expect states to disproportionately cut transportation spending (50% of industry consumption) as they seek to protect spending on education and healthcare," Oppenheim wrote.

He expects sharper budget cuts in three of Vulcan's largest states -- California, Florida, and Virginia, which represent 50% of sales. These local economies are also more exposed to the housing downturn.

Vulcan also faces earnings dilution this year from its recent $4.2 billion purchase of fellow materials concern Florida Rock. The acquisition, announced in early 2007, comes at a horrible time as the Florida building market becomes increasingly dismal.

Oppenheim, who has the lowest estimates of any Wall Street analysts on Vulcan, expects the company's earnings per share to fall 6% to $4.60 in 2008. Analysts' average estimate calls for Vulcan to increase EPS by 1% to $4.92.

Look for the consensus estimates to begin falling.

Perini's Contract Questions

Perini has been a highflier in recent years, but fears of a recession have sent the stock down 51% off its 52-week high. Shares currently trade around $37.

The bearish thesis on Perini revolves around its commercial building segment, which represents about 80% of revenue. (The remainder of the company's business deals with public works projects and management contracts for U.S. government construction projects.)

The bulk of the building segment is tied to resort and casino development -- where bears think construction will slow going forward, given the slowing economy and weakened consumer spending.

Perini had a construction backlog of $7.8 billion at the end of September, down from $8.5 billion at the end of 2006. That backlog translates into about a year and a half of revenue.

Perini's contracts include some of Las Vegas' largest construction projects, such as MGM Mirage's ( MGM) massive City Center complex.

Las Vegas currently is enjoying the largest building boom in history, with 40,000 hotels rooms slated to be added over the next three years to the existing 133,000 rooms, says Brian Gordon, a principal with consulting firm Applied Analysis.

From the beginning of 2007 to 2010, a total of $54 billion of projects are expect to be completed, according to the Las Vegas Convention and Visitors Authority.

Two projects that Perini is working on in Las Vegas are already facing some question marks. The Cosmopolitan Resort and Casino, which sits next to MGM's City Center, has been under construction since before City Center broke ground, but is far less advanced.

Nonetheless, Perini said in its last conference call that the hotel was on track for completion at the end of 2009. The company has blamed difficult excavation work for the delays.

Perini is also working on the Trump International Hotel and Tower in Las Vegas. While Tower 1 is nearing completion in coming months, there have been no definitively announced plans to start construction on Tower 2.

Analysts project Perini will see earnings per share rise 7% to $3.68 next year. Over the next five years, earnings are expected to rise 12.5% annually.

These numbers incorporate a slowdown in growth from previous years, but Perini's results could prove even worse if the economy heads into a recession or if existing projects run into troubles.