Select Comfort Corp. (SCSS)

dstb (95.15) Submitted: 8/29/06 4:20 AM : Start Price: $19.22 SCSS Score: 89.04

Large repurchases of shares to cover dilution due to stock options is merely moving expenses from the income statement to the cash flows (financing) statement. This company's expenses are significantly higher than they appear. Additionally, their high margins will cause more and more competitors to enter the market with cheaper substitutes. These competitors don't have to be better but just chip away at SCSS's margins. SCSS will always have a piece of the market but they will be forced to lower prices to compete, taking hits on profitability along the way. These two factors will act like a weight on this stock's price.

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