Sleep Country Canada (ZZZ.TO)

The underperformance in the near term has mostly been related to the last quarter they reported, where same-store sales performance was not as good as the analysts had expected. Over the last number of years, this has been a very, very well-run company, and the stock has done extremely well. Expectations may have gotten too high. They’ve been gaining share from Sears Canada, which should continue.

(Market Call Minute) It is relatively expensive. Good management, growth and earnings, however.

(A Top Pick July 27/16. Up 46.11%.) This continues to execute very well. It has pulled back of late, which is probably from rotation out of the sector. They will be reporting next week, and he expects pretty strong sales again. They’ll probably be helped by all the trouble at Sears, one of their big competitors.

In a good competitive landscape it is focused on the mattress landscape. Its biggest competitors like Sears, are not having a good time of it. Good advertising and refurbishment of their stores is really helping them. It is one he has owned for several months and will likely to continue to own.

It has a good run this year based on Sears mattresses. They also had good numbers. There is also a scarcity for consumer stocks in Canada. This is a stable name a decent long term hold. You want to go and test a mattress.

(A Top Pick June 6/16. Up 77.73%.) They’ve done very well in executing their marketing campaign. Have been pulling back and not advertising as much. They’ve been taking market share from Department stores as well as adding higher margin accessories.

(Top Pick Jun 30/16, Up 75%) They continued to execute very well and have grown business at the stores and got into accessories where they drive more business at a higher margin. Now they moved up because of recent announcements by Sears.

He used to be short it. It is an expensive shop. There are some short term benefits with Sears potentially getting out of the mattress business. There are regulatory and competitive changes on the landscape for this one.

This company has executed and continue to do so. They’ve built out a great franchise. In the meantime, all their competitors are shrinking away from the Canadian market. He would stick with this.

(A Top Pick March 1/16. Up 70%.) Not a cheap stock, but continues to be justified because some of the former competition is no longer in effect, which has left a lot of market share up for grabs.

(A Top Pick Sept 16/16. Up 6.37%.) Expanding into the higher margin accessories line, scented pillows, duvet covers, etc. They are also renovating 15-20 of their stores every year. The competitive profile favours them.

This is not just selling mattresses, but are also selling accessories, which are higher margin lines of products. It is doing very well, which is reflected in the charts. If the company is doing well, you will see investors appreciate that and adding value to the stock price, and we are seeing that. Dividend yield of 1.84%. (Analysts’ price target is $36.)

Has done a great job taking a huge market share away, from Sears in particular. It got to the $34-$35 range which was a little ahead of itself. Dips provide an opportunity. In Canada, there aren’t many choices in consumer that have the growth, but this is one of them. He has a Top Pick which is his choice. The company is well-managed and a good Hold here. Because of the multiple, you don’t get multiple expansion, you only get earnings growth. However, you could probably make 10%-20% profit on this. Dividend yield of just over 2%.

High single digit same store sales growth which is unknown by retailers in Canada. Growth in Accessories is close to 20% on a same store sales basis. (Analysts’ Target: $34.50).

He likes this company. There is a real scarcity of consumer stocks in Canada, and this one fits that bill. He was cautious on the IPO, because it was a private equity one, and he is always leery about private equity. Last year they did 11% same-store sales, and this year they are on track to do about 9.5%. Even if they can do 5% same-store sales, that is very impressive. A good name, and not particularly expensive.