Home goods retail stores are now in the spotlight as society returns to normal. The housing market is on a tear, interest rates are low, and the enormous millennial age cohort wants to escape cramped apartments for actual houses.
If you are not invested in home goods stocks, now is the time to consider establishing a position. However, there are several players in this space, so choosing one will prove challenging.
Bed Bath & Beyond (BBBY)
BBBY is a specialty retail store operator in North America. BBBY primarily sells home furnishings and merchandise used in the home. Aside from operating under the business name of Bed Bath & Beyond, BBBY also operates under the names of Face Values, buybuy Baby, Christmas Tree Shops, and Harmon.
BBBY has an overall grade of C, which translates into a Neutral rating in the POWR Ratings system. The stock has a Momentum Grade of A, Value Grade of B, and grades of C in the Quality and Growth components. You can find out more about how BBBY fares in the remainder of the POWR Ratings components, such as Sentiment and Stability, by clicking here.
Of the 64 stocks in the A-rated Home Improvement & Goods industry, BBBY is ranked 50th. You can find other top stocks in this industry by clicking here. BBBY is currently trading at a forward P/E ratio of 22.64. This is an indication that the stock might be slightly overvalued. Although, the stock is highly volatile, with a beta of 1.83.
BBBY has the unenviable task of increasing foot traffic to its stores. Though the company deserves credit for its private brand launches, there is still the looming issue of insufficient traffic. Even if BBBY succeeds in rolling out three new brands by the middle of the summer, there is reason to question if a considerable number of prospective customers will even step foot in BBBY stores or visit the company’s website to take a look at the new offerings.
The Container Store (CTS)
CTS designs and makes products that move, connect, and sense. These sensors and electronic components are provided to original equipment manufacturers in many segments, including transportation, information technology, medical, defense, aerospace, industrial, and communications.
CTS has an overall grade of B, translating into a Buy rating in our overall POWR Ratings system. The stock has a Quality Grade of A and grades of B in the Momentum and Growth components. Investors who would like to learn more about how CTS fares in the rest of the components such as Sentiment, Value, and Stability can do so by clicking here.
Of the 45 publicly traded companies in the B-rated Technology – Electronics industry, CTS is ranked fifth. You can find other top stocks in this industry by clicking here. CTS appears a tad overvalued with a forward P/E ratio of 24.08. However, the stock has a low beta of 0.72.
Which is the Better Play?
CTS is the better of these two home goods stocks. CTS has a better overall rating in the POWR Ratings system, superior components grades, and a better industry rank. CTS is ranked in the top five of its industry, while BBBY struggles to crack the top 50.
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BBBY shares were trading at $35.51 per share on Wednesday morning, down $1.32 (-3.58%). Year-to-date, BBBY has gained 99.94%, versus a 13.44% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...
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