Top Picks 2019: At Home

At Home (HOME) is a home décor superstore which offers 50,000 on-trend home products to fit any budget or style; there are 168 stores open and they expect to open 31 stores in all this year, explains Tom Bishop, small-cap specialist and editor of BI Research.

At Home hit an air pocket in the wake of the release of Q3 earnings (on December 6th). The company posted a 25% increase in revenues to $267 million beating the consensus by a couple million and adjusted EPS of $0.18 was up 157%, also beating expectations by $0.03. However, management also gave some cautionary notes on some headwinds in Q4.

However, an upside EPS surprise of $0.03 vs. the consensus allowed it to continue to guide to its earlier $1.28-$1.31 for the full year (FY1/19). I should note here that management tends to guide conservatively, having beaten estimates by 20%, 3%, 15% and 43% in the past 4 quarters.

While the company deferred on giving guidance on the year ahead (FY1/20) until its year-end conference call in March, it did note that the new Pennsylvania distribution center (its second in Washington, DC) would weigh on Q4 due to $4 million of one-time start-up expenses.

While some investors took this all in and hit the exit button — tanking the stock to $20 in two days — on 12/10, two directors bellied up to the deep discount table and scarfed down 20,400 shares between them at around $21. And one of them also purchased 10,000 shares at $26.50 in late October.

On 12/10 the CFO also bought 4,993 shares at $20.28, and on 12/11 the CEO exercised an option to buy 20,000 shares at $9.73 and did not turn right around a sell them (as is often the case). And on 12/13 another director bought 22,500 shares at $21.13 ($475k). And then one more insider stepped up to the plate on 12/26 and helped himself to 3,875 shares at $17.20.

Whether all the pain has been lashed out, I can’t say. But all this insider buying is certainly encouraging. So on the basis of HOME’s deep discount and the huge insider buying, the shares are a buy for longer term aggressive investors.