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Select Comfort: Finally a good night’s sleep

Today's Financial News - Posted October 6, 2009

Getting a good night sleep is easy to do when you are sitting on gains of nearly 3,000%. Just ask Select Comfort (NASDAQ:SCSS) shareholders.

By Andrew Snyder, TodaysFinancialNews.com

Baltimore – (TFN): The Dow is getting closer to the vital 10,000 level. Thanks to some decent economic data and a bold move by Australian bankers, the equities market is soaring today.

After today’s surge of nearly 2%, the Dow is with 250 points of five-digit territory. Just two more days like this one and we will eclipse the psychologically important level.

For investors in some of today’s high fliers, overcoming a purely arbitrary hurdle is of no concern. They are sitting on big gains regardless of the Dow’s action.

One of those companies is Select Comfort (NASDAQ:SCSS). The $270 million maker of “adjustable-firmness” beds is continuing a three-day winning streak today, adding another 10% to its value.

Stuffing mattresses with money

In all, its shares are worth nearly 35% more today than they were on Friday morning. Even better, investors that got in at March lows are sitting on gains of, get this, a whopping 3,000%.

That’s right, shares of the company that invented “sleep numbers” are generating some fantastic numbers of their own.

The latest spike comes thanks to the finalization of a deal that created plenty of uncertainty over the past six months.

Last May, Sterling Partners offered to purchase 52.5% of Select Comfort for $0.70 per share, a price that was below its trading price at the time.

The deal was thoroughly rejected by shareholders but raised suspicion of a less-than-favorable counter offer or even a hostile bid.

With Sterling and Select Comfort finalizing a $10 million deal today that cost shareholders just 8.9% of their company (2.5 million shares plus warrants for an additional 2 million shares), investors are sighing with relief.

Although the additional shares were sold at a discounted price of $4, Select Comfort investors managed to hold out for a much, much better deal.

The company’s capital struggles are far from over, but at least they are maintaining control of the firm and getting a needed financial shot in the arm.

Granted, with nearly $200 million in outstanding debt, Select Comfort could come crashing down with any hit at a nasty double-dip recession.

But as long as the economic environment maintains its current growth trajectory, I expect shares of the company to remain near current levels, if not slightly higher.

This may be the first night in a long time Select Comfort shareholders can get a restful night’s sleep. After the last six months, they deserve it.


Next Article: TFN eNews 10/06/2009: This is big news, folks! It should be taken very seriously…

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Posted by Andrew Snyder · Filed Under US Stocks and Markets 

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