5 Best Furniture Stocks to Buy Now

Despite not having the widespread appeal of the tech or biomedical sectors, home furnishings have been a surprisingly reliable source of returns for investors over the years.

 

Consumers have a consistent need to buy new home essentials, making furniture stocks generally stable and reliable. Subsequent to the general stock market correction, though, many furniture stocks have sold off in the early months of 2022.

 

In a few cases, poor performance in recent months has created buying opportunities for investors. While not every furniture company will be a good investment at the moment, some have the potential to generate outsized returns. Here are five of the best furniture stocks to buy now.

 

Restoration Hardware (NYSE:RH) is a luxury furniture retailer that has proven to be one of the best growth stocks in the industry over the last several years.

 

Restoration Hardware has rewarded investors with gains of more than 1,800 percent in the last half-decade, and the company doesn’t plan on plateauing anytime soon.

 

In 2022 and beyond, the company plans to expand internationally, eventually creating a presence in every major global market. As that expansion occurs, RH investors will likely continue to see strong returns. 

Restoration Hardware runs its business on an operating margin of about 28 percent, a fact that has contributed significantly to its recent growth. In spite of that growth, the stock is also priced quite fairly at a P/E ratio of only 16.1. This combination of high margins and reasonable pricing is likely part of the reason that Warren Buffett’s Berkshire Hathaway holds over $973 million in RH stock.

 

Analyst price targets for RH are quite bullish, despite the stock being down 36.5 percent this year. The average 12-month target is $691.08, which would give Restoration Hardware a 98.8 percent upside. The highest target is $850, and the lowest is $500. It’s worth noting that at the lowest target, RH would still return 44.4 percent.

 

At the moment, Restoration Hardware appears to be a strong buying opportunity. With a growth plan for the future, high historic growth rates, excellent margin and reasonable pricing, RH is well-suited to value investors. While the stock has taken a beating so far this year, the company seems to be an excellent long-term bet.

 

Online furniture retailer Wayfair (NYSE:W) has had a very bad year, with the stock losing 68 percent of its value since March 2021.

 

While this opens the door to concerns that the stock may be a losing proposition, there’s also a chance that the drop may have put it into oversold territory and made it an attractive buy.

To say the least, Q4 was not kind to Wayfair. The company reported a drop in revenue of 11.4 percent compared to the previous year, including a 23 percent drop in international revenue.

 

The year as a whole was somewhat better, with overall revenues dropping by 3.1 percent and a 9.6 percent increase in international revenue. Wayfair finished the year with a loss of $1.26 per share.

With all of this said, Wayfair has strong future growth prospects and an extremely loyal customer base.

 

With the stock off by nearly 70 percent, investors who buy now may be able to lock in gains as the company bounces back.

 

If the stock hits its median 12-month price target of $140, it will return 18 percent over its current price of $118.84. This scenario doesn’t require the stock to come anywhere close to its 2021 high to produce a generous single-year return.

 

Wayfair may be in for a bumpy ride, but the company’s strong presence in the online marketplace will likely allow it to claw its way back from the disappointing results of 2021. With the stock likely in oversold territory, Wayfair has strong potential at its current price.

 

Herman Miller is a smaller furniture company that mostly specializes in office furnishings. The company’s stock is fairly valued and appears to have decent future prospects, especially as companies bring employees back into office spaces.

 

In Q4 2021, Herman Miller turned in strong results that show off its growth potential. Orders were up 28.8 percent over the previous year, with consolidated net sales up 30.6 percent.

 

Retail sales rose by 106 percent. Contracts in the North American market also showed robust growth as workers returned to offices, with orders rising by 21.2 percent compared to Q3.

 

Analysts place Herman Miller’s target price in the relatively narrow range of $55-62, with an average of $59. Given that the stock currently trades at just over $35, any price within this target range would give Herman Miller a generous 12-month upside. Even underperforming substantially, the stock could return 20 percent or more by the end of the next year.

 

Taken together, these data points paint a picture of a company that is on a strong growth trajectory and whose stock is priced at a very reasonable level, given its prospects. As more office workers continue to return to in-person work, expect Herman Miller to turn in strong sales and order results.

 

Price forecasts also show that there’s ample room for investors to profit from buying this stock, even if the 2022 performance isn’t as high as expected.

 

Best known for its line of premium recliners, La-Z-Boy (NYSE:LZB) is a surprisingly good buy option in the furniture industry.

 

With a trailing 12-month P/E ratio of just 10.17, the company is priced quite reasonably. La-Z-Boy is also trending higher in analyst earnings and revenue forecasts, showing a generally bullish outlook among financial professionals.

Like many furniture stocks, La-Z-Boy has had a difficult time over the past year. At the moment, the stock trades near the bottom of its 52-week range of $26.88-46.74.

 

That said, the company’s prospects for future growth still look quite robust. The current price target for the company’s stock places it at $40 early in 2023. This would represent a 12-month gain of over 35 percent.

 

La-Z-Boy may not have the upside of Restoration or Herman Miller, but it still has the potential to beat average market returns over the next 12 months. The company’s well-established business and name recognition among consumers will also likely help it navigate the increasingly competitive furniture sales industry in the years to come.

 

Last but not least is Leggett & Platt (NYSE:LEG). This well-established manufacturer offers an attractive combination of strong cash flows and a well-managed balance sheet.

 

The stock is also priced at the very reasonable ratio of 12.55 to trailing 12-month earnings. Leggett & Platt has fared better than many other furniture stocks this year, losing just 10.35 percent YTD.

One of the best aspects of Leggett & Platt for investors is its relatively high dividend yield. The company currently pays out 4.69 percent or $1.68 annually per share. This generous dividend can help investors ride out the current market volatility by providing a fairly substantial return in the form of cash payments until the stock recovers.

 

Speaking of recovery, analyst price forecasts show a generally positive outlook for Leggett & Platt. The average target price of $45.50 would represent a gain of 23.3 percent against the current $36.90 trading price. Combined with future dividends, this potential return makes Leggett & Platt quite attractive at its current price.

 

Other furniture stocks may post higher returns in the coming 12 months than Leggett & Platt. However, the company’s somewhat better performance this year, high yield and reasonable upside make it a slightly less risky proposition than more distressed companies like Wayfair. If you’re an investor looking for high returns in the furniture industry at a bit more conservative risk level, Leggett & Platt may be a good fit.

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