The following are the three major gainers from yesterday's trading session and a strategy to trade them going forward.
Tempur-Pedic International Inc (TPX) gained 9.08% in yesterday’s trading session. With a market capitalization of 4.12B, Temper-Pedic is a worldwide leader in premium and specialty sleeping products. The company develops, manufactures and markets advanced sleep surfaces that improves the quality of mattresses and pillows.
The stock appears to be a good buy based on healthy financials and growth opportunities it presents. It reported its first quarter results in April which exceeded expectations in both North American and International segments. In the long term, demand for high-end, specialty bedding products is expected to continue improving as the economy improves and consumers seek high quality, alternative sleep surfaces.
With TPX gaining market share in this segment, its prospects remain very favorable. Further, TPX's expansion in international markets is still in early innings. In 1Q11, TPX posted an 11% increase (or 8% on a constant currency basis) in international sales. The company's major international initiatives like the roll out of “cloud line” are still in early stages and expected to benefit top-line results going forward and we can expect continued improvements.
AMERCO (UHAL) gained 8.02% in yesterday’s trading session after reporting record March 4Q11 numbers. With a market capitalization of 1.83B, AMERCO is the parent company of U-Haul International Inc. which is the largest “do-it-yourself” moving and storage operator. I believe this stock is a good buy. Steady gains in its core moving & storage segment for the past six quarters shows strong execution by the management as well as favorable end market demand. Moreover, the company has high operating leverage because of its high fixed costs and is steadily gaining market share against competitors.
Niska Gas Storage Partners LLC (NKA) gained 6.67% in yesterday’s trading session. Niska Gas Storage Partners, LLC is involved in the acquisition, development, and operation of natural gas storage facilities. I will suggest a cautious approach on this stock due to weak Natural Gas storage fundamentals. This limits visibility into short-term firm and optimization profitability. The company’s management chose not to provide FY2012 guidance while announcing last quarter results due to the same reason. Yesterday’s rebound appears more like a dead cat bounce.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.