Top Picks 2019: Sleep Number (SNBR)

01/22/2019 5:00 am EST


Crista Huff

Editor, Cabot Undervalued Stocks Advisor

Sleep Number (SNBR) — my top growth pick for 2019 — is the leader in sleep innovation, and a designer, manufacturer, marketer, retailer and servicer of a line of Sleep Number beds, bases and bedding accessories, explains Crista Huff, editor of Cabot Undervalued Stocks Advisor.

Revenue has increased consistently from $960 million in 2013 to an expectation of $1.6 billion in 2019. Wall street projects EPS to increase 23.5% and 30.4% in 2018 and 2019. The 2019 P/E is 13.2.

Sleep Number is aggressively reducing its basic outstanding share count, which has fallen 37.7% since year-end 2013, from 54.9 million shares to 34.2 million shares as of September 30, 2018.

The company is targeting continued earnings growth, 8%-10% revenue growth, and additional share repurchases in 2019.

Sleep Number is a micro-cap stock in the consumer cyclical sector, with a market capitalization of $1.1 billion. Micro-cap stocks are volatile, sometimes going months without any solid news for investors.

The stock traded out of sync with the broader stock market in 2018, performing better in the fourth quarter than it had in the summer. Investors can expect the stock to continue its current trading pattern between $31 and $40 before advancing further.

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