Sleep Country Canada (ZZZ.TO)

During the downturn in the financial crisis, they cut back on spending, and the sales growth slowed down. Now they have started spending again, sales growth has started to pick up. They are taking market share away from Sears, the Bay, etc. They are also adding ancillary products of pillowcases, etc., which actually have higher margins than the mattresses themselves. There is a lot of upside remaining in this. Dividend yield of 2.14%. (Analysts’ price target is $34.50.)

He no longer owns this based on his technical tools. Saw that it was starting to break down technically. Fundamentally he loves the company. This is one you can tuck away in your portfolio and go to sleep.

(Top Pick Aug 9/16, Down 11.65%) He sold, although they released their most recent numbers and they were quite good.

It came back phenomenally with a second IPO. They are taking market share away from Sears. They have a lofty valuation. At some point there has to be saturation. Unless they go south of the boarder you will run into a wall. Execution has been flawless up until now.

A very well-run business, with a dominant position in the Canadian mattress retailing business. Have been benefiting over the last number of years from some of the larger mattress sellers like Sears Canada. Feels a lot of that market share gain has played out. There is some link to the housing market in Canada as new households are formed. He is a little more cautious on the overall outlook for a company like this because of the headwind on the housing side. There are a number of US mattress retailer’s being impacted by very small, but upstart competitors that are selling mattresses in a box online and delivering them to your door.

Has never owned this, and looking back that was a mistake. The valuation now is absolutely crazy. There is a company in the US that delivers extremely high quality mattresses to your door. Has always been a little sceptical that there have been new technologies that will push people away from traditional mattress purchases. Feels the industry might go through a bit of a change.

There is still a market for companies that are able to really focus on what they do, and do it better than anyone else. This type of product really doesn’t lend itself to e-commerce. It is getting its growth from redesigning, redeveloping and making their stores better. They sell the mattresses, but the real upsell is on the higher margin bedding. Dividend yield of 1.92%.

He recently added a small position. The company seems to have really delivered since the IPO. This is an interesting space.

Feels that everything is solid with this company. However, there is a question about housing and if we are experiencing a big bubble, which at some point would soften.

The Dollarama for the next 5 years in that they are growing their store numbers. Their penetration for population base is not where they want it to be, but want to bring it down so that there are more stores per 100,000 people than there are right now. They continue to grow their sales. Have had 12 consecutive same-store sales growth. The last quarter was double digits, which is really unheard of. They are focusing on their sales process and on accessories. Accessories are higher margin than just the street mattresses. The stock is not cheap, so if you can get it when it pulls back, that would be a great time. Dividend yield of 1.75%.

This sounds gimmicky, but they are doing very well. 80% of their sales are mattresses, but they are now getting into duvets, covers and pillowcases, etc. Valuation is a little high, but profits and revenues are both growing at very healthy rates. Their competition is Sears Canada and Bay Canada, where you can go in and have a nap before anybody comes to help you.

What is really going for them, since they have come back to the public market, is that the consumer is more and more aware of health benefits of having a good night sleep. Traditionally, you can buy a lot of mattresses, from major retailers, but they are slowly declining and haven’t done really well, and are retrenching which gives this company a good opening. The company is also adding high margin things like pillows, covers, accessories, etc. Dividend yield of 1.92%.

The dominant name in this space. They have built a great niche for themselves. People will always need mattresses. His sense is that they tend to provide mattresses for an upscale clientele, so you may not see much of a decline. Thinks you will be fine.

Continues to execute exactly as he anticipated. They continue to grow same-store sales by increasing store numbers and increasing the dollar spend with people coming into their stores. The recent quarter was the 12^th consecutive same-store sales growth quarter. They’ve also been working on improving margins by selling accessories including higher end pillows and beddings. Still a lot of runway left for them to grow. Dividend yield of 1.94%.

Has been a public company for about 18 months and have done a great job of growing market share. They’ve done a fantastic job of introducing higher margin products like bedding and bedsheets into their product line, and an exceptional job of growing not only same-store sales, but also new store openings. Dividend yield of 1.88%.