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JimVanMeerten (57.25)

Furniture Brands International in turn-around mode



April 07, 2011 – Comments (0) | RELATED TICKERS: FBNI

How about a company that you may not know but you know their products.  Technically, Furniture Brands International (FBN) has everything going for it on Barchart but fundamentally its a speculative pick. Management has put in place a turn around strategy. The stock will rise or tank on the success of that strategy's implementation.

Recent price momentum is what draws me to this stock. Slow and steady.

Furniture Brands International, Inc. (FBN) is one of the largest manufacturers of residential furniture in the United States. They market products through three operating subsidiaries: Broyhill Furniture Industries, Inc., Lane Furniture Industries, Inc., and Thomasville Furniture Industries, Inc.

First let's look at the technical momentum factors:

1 - 100% Barchart short term

2 - Trend Spotter buy signal

3 - 12 new highs and up 23.70% in the last month

4 - Relative Strength Index 71.86% and climbing

5 - Trades around 5.16 with a 50 day moving average of 4.35

Fundamental Factors:

1 - Management has 2 major problems to solve --  store costs and manufacturing costs

2 - Shuttered stores are now being subleased

3 - Manufacturing is being moved from high cost areas to Mexico and Indonesia

4 - Consumers who are employed may not be able to move but they are upgrading the furniture in their homes

5 - Wall Street brokerage analysts have published 1 strong buy and 3 hold recommendations

6 - Sales are expected to increase by only .20% this year and 5.60% next year

7 - Earnings are the story with a projection of an increase of 43.40% this year and 93.00% next year

General Investor Sentiment:

1 - As measured on Motley Fool investor sentiment is very split -- but isn't that where you make the best plays?  Getting in before the herd is always best.

2 - CAPS members are split 94 to 89 that the stock will out perform the market

3 - The more experienced All Stars seem equally split 41 to 36

My advice is to recognize that this is a speculative issue not a core position.  It's price is rising so if you buy, place a stop loss.  Be along for the ride while it lasts.

Jim Van Meerten is an analyst for  Marketocracy Capital Management.  He shares his knowledge and experience from over 40 years of investing in stocks, mutual funds and ETFs  in his daily blog -- Barchart Portfolio Blogs.

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