Don't Miss Today's Strong And Under The Radar Stock: Tempur Sealy International (TPX)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Tempur Sealy International ( TPX) as a strong and under the radar candidate. In addition to specific proprietary factors, Trade-Ideas identified Tempur Sealy International as such a stock due to the following factors:

  • TPX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $40.3 million.
  • TPX is making at least a new 3-day high.
  • TPX has a PE ratio of 39.2.
  • TPX is mentioned 0.32 times per day on StockTwits.
  • TPX has not yet been mentioned on StockTwits today.
  • TPX is currently in the upper 20% of its 1-year range.
  • TPX is in the upper 35% of its 20-day range.
  • TPX is in the upper 45% of its 5-day range.
  • TPX is currently trading above yesterday's high.

'Strong and Under the Radar' stocks tend to be worthwhile stocks to watch for a variety of factors including historical back testing and price action. Market technicians refer to such stocks as being in an accumulation phase before a mark-up and peak. Traders and hedge funds have frequently found that these types of stocks continue to build a solid price base and then ultimately spike higher and peak when others 'discover' how good the stock is performing. By leveraging the social discovery aspect of StockTwits we are highlighting stocks that don't currently receive much attention from retail investors, but we suspect may soon garner more attention.

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More details on TPX:

Tempur Sealy International, Inc. develops, manufactures, markets, and distributes bedding products in North America and internationally. The company provides mattresses, foundations, adjustable bases, and other products, including pillows and other accessories. TPX has a PE ratio of 39.2. Currently there are 6 analysts that rate Tempur Sealy International a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Tempur Sealy International has been 833,900 shares per day over the past 30 days. Tempur Sealy International has a market cap of $3.6 billion and is part of the consumer goods sector and consumer durables industry. The stock has a beta of 2.29 and a short float of 11.1% with 5.09 days to cover. Shares are up 10.5% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Tempur Sealy International as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and feeble growth in the company's earnings per share.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 6.0%. Since the same quarter one year prior, revenues slightly increased by 8.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has significantly increased by 543.11% to $74.00 million when compared to the same quarter last year. In addition, TEMPUR SEALY INTL INC has also vastly surpassed the industry average cash flow growth rate of 245.93%.
  • Compared to its closing price of one year ago, TPX's share price has jumped by 41.37%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Household Durables industry. The net income has significantly decreased by 37.5% when compared to the same quarter one year ago, falling from -$1.60 million to -$2.20 million.
  • The debt-to-equity ratio is very high at 11.39 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, TPX maintains a poor quick ratio of 0.97, which illustrates the inability to avoid short-term cash problems.

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