This January I've highlighted a number of stocks that I believe will do well in 2020.
So far I've discussed a small biotechnology name with a good chance of being taken over, a technology company on the leading edge of new developments in the cloud, a growing genomics play that could prove to be a hit in 2020, and a cosmetic surgery stock that is looking good this year.
A fifth stock that I believe will do well in 2020 is mattress manufacturer Tempur Sealy International (TPX) . While this may sound like a very "sleepy" business with limited growth, TPX offers a great chart as well as very strong growth.
TPX isn't a stock that I would normally pay attention to but the chart caught my eye and I was surprised at the company's very strong EPS growth. Unlike many other high momentum names, TPX trades as a surprisingly low multiple.
TPX is expected to grow earnings per share to $5.49 in 2020, which would be an increase of 45% over the $3.79 consensus estimate for 2019. The stock trades at a trailing P/E of just 25x which is quite cheap given the level of growth.
What is even more interesting is that earnings have been accelerating. The company has beat EPS estimates by 12.5%, 17.9%, and 14% in the last three quarters, respectively. Earnings for the December quarter are expected to be $1.16 per share.
TPX jumped sharply higher at the end of October after a very strong report and guidance. It has been consolidating in a narrowing range and is setting up to move over a key resistance level. The play here is that anticipation of a good earnings report on the morning of Feb. 13 will send the stock over key resistance and generate some momentum.
Tempur Sealy has a good chart and an excellent valuation. If it continues to perform and beat expectations it should be a solid performer in 2020.
I will be following all five of my 2020 picks on a periodic basis throughout the year.