Editor's note: Since Price wrote this piece on Real Money, Bassett reported its latest financial results. Shares are now up about 25% from where they were when Price identified the stock as a buy.
Often, Paul Price recommends that investors take a slightly more sophisticated position than the average trader. In particular, he frequently suggests selling puts on a stock he likes, letting him either pocket his commissions or own a stock he’d planned on buying anyway at a lower cost.
But the more straightforward approach of just buying shares works too.
“Bassett Furniture (BSET) produces a wide assortment of furniture sold through its own stores as well as many of America's top retailers. It covers all major price points from entry level right through luxury brands," Price wrote recently on Real Money. "The shares are quite volatile (beta = 1.35) which presents great opportunities for traders willing to buy low and sell high."
In addition "Bassett shares peaked last May at $37. On Jan. 28, they were offered for just $13.71, a discount of almost 63% from last year's high. Better still, fiscal year 2022 results figure to be up, not down, versus 2021."
Price added that "a typical multiple for Bassett has run about 17 times, accompanied by around 2.02% in current yield. At last Friday's quote, Bassett's valuations were astoundingly attractive at 6.6 times forward estimates while yielding 4.08%."
So, "simply reverting to a more normalized price-to-earnings ratio could easily send Bassett back up to north of $35 by this time next winter.”
“Owning shares outright,” he writes, “is the best way to capture Bassett's generous upside potential plus its greater than 4% current yield.”
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