Why These 3 Stocks Bounced Up Today

A normally sleepy industry announced some big news on Friday. A bedding industry trade group, the International Sleep Products Association, stated that its "April Bedding Barometer" indicated increases in sales compared to last year. And this news has shares of mattress retailers springing up.

Shares of Sealy (NYS: ZZ) , Select Comfort (NAS: SCSS) , and Tempur Pedic International (NYS: TPX) were all up roughly 4% on Friday. By comparison, it was a relatively flat day for the market; the SPDR S&P 500 (NYS: SPY) , a proxy for the S&P 500, remained relatively unchanged.

This recent announcement comes on the heels of some interesting industry dynamics. In the $4.6 billion U.S. wholesale mattress market, traditional mattress manufacturers, such as Sealy, have been tussling with high-end makers of memory-foam mattresses. The most notable manufacturers of memory-foam mattress include Select Comfort and Tempur Pedic International.

Memory-foam mattresses comprise the fastest-growing segment of the market. In the past eight years, market share for memory foam increased from 14% to nearly 20%. Sealy, which was late to the memory foam segment of the market, has been punished for not jumping on this high-end segment sooner.


Mattress Brands

YTD Return

3-Year Return

SealySealy Posturepedic Stearns and Foster(7.4%)(23.3%)
Select ComfortSleep Number19.9%2557%
Tempur Pedic InternationalTEMPUR-Cloud TEMPUR-Contour(14.6%)328.5%

Sources: Company websites, The Motley Fool.

One of my Foolish colleagues feels so strongly about Tempur Pedic, in particular, he thinks the company should aggressively buy back shares. I agree. It currently trades near its 52-week low, has great growth potential, and appears undervalued.

The affluent -- and those who value sensational slumber enough to fork over a few grand -- have to rest their heads somewhere. I view the memory-foam mattresses market well-poised for further growth, and I specifically like Tempur Pedic.

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At the time this article was published Fool contributorNicole Seghettidoes not own shares in any of the companies mentioned in this article. She enjoys getting a good night's sleep. The Motley Fool owns shares of Tempur Pedic International. The Motley Fool has sold shares of SPDR S&P 500 short. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

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