(Editor's note: A version of this article appeared in
What's the Trade?
newsletter of Nov. 9
I don't know about you, but I love earnings season.
Not for the big news, but for some of the smaller stories that
don't get nearly the attention they deserve. Today we're going to
look at some of these industries and names, and introduce a new
tool to help you discover and track them.
Yes, I know it's not a commonly discussed sector, but two companies
have been knocking the cover off the ball. Polaris Industries
(PII) led the charge on Oct. 18, crushing forecasts on the top and
bottom lines. It also raised guidance for the third straight
quarter. Artic Cat (ACAT) followed with equally impressive results
later in the month.
In previous columns I have stressed that the U.S. economy is in the
midst of a major long-term shift back toward primary industries.
Wages are going up in agriculture, mining, and oil-related jobs.
That means more disposable income in rural areas where these kinds
of recreational products make sense. (PII also makes other kinds of
The good thing is that this is a relatively small market with a
diverse range of dealerships. That means there are high barriers to
entry, and it's not big enough to encourage major competition. In
the words of Warren Buffett, it has a moat around it.
Big banks are contracting, and non-conventional lenders are
stepping in. Companies such as EZCorp (EZPW), Cash America (CSH),
and First Cash Financial (FCFS) have all reported strong results,
continuing a pattern seen in previous quarters.
These companies are also snapping up independent locations across
the country, expanding into Mexico, and consolidating a highly
fragmented industry. And unlike traditional banks, all three stocks
are well above their 2008 levels and appear to be in long-term
Tempur-Pedic International (TPX) and Select Comfort (SCSS) are the
two companies in this group. Both have new kinds of materials that
customers seem to love, and have beaten estimates the last three
times they reported.
SCSS also said it's opening new stores to deal with the runaway
demand. Interestingly, Leggett & Platt (LEG), a longtime maker
of old-fashioned mattress springs, cut its guidance for the second
straight quarter. Sealy (ZZ), which makes traditional mattresses,
hasn't fared much better.
So it appears that a true long-term transition is underway. Maybe
not as noteworthy as the shifts from typewriters to computers or
chemical photography to digital, but a shift nonetheless.
Snowmobiles. Pawn shops. Mattresses. Not the sort of industries you
often hear much about. So how do you find them and track them?
, the latest addition to our suite of services at optionMONSTER.
researchLAB is a new tool that will be officially released on
Monday, Nov. 14, that provides a new way to look at the market. It
organizes companies and news around themes, providing much more
granularity than is found elsewhere. It also contains some
completely unique screening tools to find what's working now.
Stay with us in coming weeks and months for many more details and
examples of how this service can provide an edge to your