Market Health

Why Investors Shouldn’t Sleep on This Comfy Opportunity in 2021

We’ve all been in quarantine for months now.

Many of us have been secluded in our homes and stuck in virtual meetings, dressed professionally from the waist up.

To pass the time, a lot of people have taken on home projects and improved their decor.

And one of the most popular areas to redo is the bedroom.

I honestly never would have expected it, but the pandemic triggered a boom in mattress sales.

And since those March 2020 lows, one of the most profitable plays for investors has been to ride this comfy shock wave higher.

Mattress Makers Performance

Shares of The Lovesac Company (Nasdaq: LOVE) – the manufacturer of “sactionals” – have risen more than 675%.

Shares of Casper Sleep (NYSE: CSPR) have nearly doubled from their lows.

And shares of Sleep Number (Nasdaq: SNBR) have rallied more than 303%.

Again, these aren’t flashy Silicon Valley stocks… These are mattress-makers and furniture manufacturers.

But it’s exciting because there doesn’t seem to be a slowdown in sight. And that means plenty more upside for one of my favorite players in the sector: Purple Innovation (Nasdaq: PRPL).

The company designs and manufactures mattresses, pillows and cushions.

It also offers mattress protectors, sheets, platform bases, seat cushions and a number of other products for consumers to feel cozy in their beds.

Now, there’s one thing I’ve always admired about Purple – it works tirelessly on brand recognition.

Without a doubt, you’ve probably seen its commercials on TV or while streaming shows.

Purple Mattress Image

And this approach is paying off.

Because business is far from sleepy for this mattress-maker.

Purple’s third quarter revenue jumped 59.4% to $187.1 million. And its direct-to-consumer revenue, which comes from consumers bypassing showrooms and buying online, surged 97.5%.

Purple Innovation Revenue

Purple’s run isn’t expected to slow down.

Fourth quarter revenue is projected to jump more than 57% to $196 million. Plus, earnings per share for the quarter are expected to dramatically improve from a loss of $0.26 to a gain of $0.11.

So not only are sales popping, but we’re also seeing Purple’s profits soar.

In fact, when the books are closed on 2020, we should see a tremendous turnaround from the 2019 losses of $0.36 per share to a gain of $0.64 per share.

And this momentum will carry through this year as well. Earnings are modeled to top $0.96 per share as revenue swells 23.4% to more than $827 million.

For comparison, Sleep Number is expected to see 2021 revenue inch 4% higher to $1.91 billion. Casper’s revenue is projected to grow less than 20% to $581 million. And Lovesac’s sales are forecast to increase 23% to $380 million.

Purple is not as big as Sleep Number. But its revenue increases are leading the pack. And that’s why I like this company as a comfy play for growth in 2021.

Here’s to high returns,

Matthew