Hooker Furniture Goes on Sale
By Jeff Reeves, Editor, InvestorPlace.com and The Slant
Many investors have never heard of Virginia-based Hooker Furniture (HOFT), which has made furniture since 1924. The goods are middle-market to premium in price point, sold under the Hooker, Envision and Opus brands for use in both homes and offices.
But being under the radar is an asset for Hooker stock, since it’s fundamentals are definitely on the way up. In April, the company reported strong fiscal 2013 results (yes, its FY2013 just ended … don’t ask why) including higher sales and net income that rose 71% compared to fiscal 2012. HOFT also is forecasting its highest earnings and sales in the current fiscal year since the great recession.
But Hooker Furniture stock has lagged the market, up only 7% in 2013 thanks to a huge selloff last week on no news. Why? Well, because this pick is a low-volume issue that trades only 20,000 to 30,000 shares daily. Even a modest order could seriously affect pricing … and it appears sellers dominated the market and skewed pricing for the past two weeks.
Always use a limit order to protect yourself in a thinly traded pick like this, but consider a bargain buy into Hooker while it’s down 15% from highs set in late May. Even if all this stock does is snap back, it will deliver good results. The furniture industry is picking up momentum as the housing market mends, so there is continued chance for upside beyond the already-improving fundamentals.
The company has no debt and $26 million in cash, which is impressive for a company with just a $160 million market cap. Throw in a 2.5% dividend, and Hooker looks mighty hot.