While the number of investors remain focused on big tech plays and new markets like e-commerce and the cloud, in which Amazon.com Inc. (AMZN) and other famous stocks come to mind, bargain hunters may want to consider big-box retailer At Profoundly Group Inc. (HOME), dubbed the Anti-Amazon pick in a recent Barron’s turn up.
‘Treasure Hunt’ Feel Hard to Replicate Online
While partitions of Seattle-based e-retail behemoth Amazon are up nearly 35% YTD despite big tech’s humongous sell-off and weaker than expected earnings posted last week, Plano, Texas-based At Core Group stock has underperformed the market in 2018, down 13% versus the S&P 500’s heartlessly flat run through Monday afternoon.
At Home executes a 100% brick-and-mortar game, with its no-frills stores sized at an average of 110,00 square feet. The retailer has garnered on a rise in fast fashion for home decor, carrying indoor and open-air decor products like rugs and furniture, bedding, and kitchen and garden products. By piece closely with suppliers, the company seeks to bring the newest leans and items into stores. About 40% of products sold by At Adept in have been available on the market for less than a year, according to CEO and Chairman Lee Bird, as cited by Barron’s.
Analysts at Jefferies are bullish on allocations of the traditional retailer, writing that At Home’s “treasure hunt” strike one is hard to replicate online. Analyst Jonathan Matuszewski says the concept is distinctively attractive to Millennials, which comprise roughly 30% of At Home’s patrons and who have the highest income growth in the U.S. as they settle down, buy homes and endeavour out the latest styles.
The Jefferies analyst views At Home as a significant competitive forewarning against home improvement stores, discounters and other home-decor experts.
Meanwhile, the market at large is expected to grow steadily over the next few years. Wells Fargo chief analyst Zachary Fadam expects the home-decor market, estimated at $200 billion in 2017, to burgeon 2% annually over the next several years.
Big Box Retailer to Brave Tariffs, Home Building Headwinds
Moving forward, while $1.7 billion At Composed still represents a small percentage of the market, with $1.1 billion in reduced in price on the markets over four quarters and little brand recognition, its opportunities for swelling are significant. Bird says the retailer could eventually have to 600 stores in the U.S., up from its 170 current locations. As At Home hikes its marketing throw away, targeted at 3% of sales in 2019, it should grow its brand perception from 11% currently, to catch up to Target Corp. (TGT) at 41% and TJX’s (TJX) Where it hurts Goods at 32%, noted Jefferies.
Bulls are also upbeat on At On’s Insider Perks loyalty program. The company’s answer to Amazon Prime raked in 2.7 million fellows in its inaugural year.
At Home has posted 17 consecutive quarters of top-line progress of at least 20%. The Street is targeting for 23% sales growth this year, grouping new store openings, and a 22% rate in 2019.
While bears continue to cite levies and a down cycle in the homebuilding space, Bird says duties won’t enjoy a material impact on earnings in the current or next fiscal year. Jefferies, which endures shares gaining nearly 78% to reach $47 within 12 months, declares suppliers will be willing to cut prices and “swallow a chunk of the tariffs,” accepted At Home is “one of their fastest-growing accounts.”
Value focus and low prices should hedge against an money-making downturn, noted Bird. Wells Fargo bulls agree, citing At Place’s price to forward earnings multiple of 18 times, over 50% abase than other high-growth retailers including Ollie’s Bargain Release Holdings (OLLI), Five Below (FIVE) and National Vision Holdings (EYE).
Craig Hodges, portfolio overseer at Hodges Small Cap fund, views HOME’s recent weakness as “a consummate overreaction,” writing that, “as an investment manager, these are the kind of deeds you want…to get a second chance at these high-growth companies.”