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Bull of the Day

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What do you do when you buy a new house or condo? Buy furniture, of course. Suddenly, that old sectional with the dog hair stuck to the pillows isn't looking so hot.

Haverty Furniture Companies, Inc. (HVT - Snapshot Report) is looking to cash in on the housing recovery. This Zacks Rank #1 (Strong Buy) is expected to grow earnings by 63% in 2013.

Havertys has seen it all. The company was founded in 1885 in Atlanta and used to make deliveries in horse and buggy. It now has showrooms in 16 Southern and Midwest states. Havertys went public in 1929 during dark economic times, but it has survived each of the big economic shocks.

The impact of the recent housing bust is obvious in Havertys multi-year earnings history. Earnings plunged 88.7% in 2007 to just 8 cents before the rest of the country went into recession and took Haverty's even lower.

The company didn't make money in either 2008 or 2009. Even 2010 and 2011 were still a struggle. But in 2012, the turnaround in the housing market, and the consumer, began to take hold. Havertys made 67 cents that year and it has seen rising earnings ever since.

As Housing Improves, So Does Havertys Business

On May 1, Havertys reported its first quarter results which easily beat the Zacks Consensus by 33%. Consumers were in the mood to shop to start the year as sales jumped 13.8% to $186.1 million while same store sales rose 11.5%.

It's not surprising that house sales and median home prices were rising throughout the quarter and Havertys business remained solid.

Gross profit margins were up 130 basis point to 53.5% from 52.2%.

Gains To Continue

The company also said that the total delivered sales to date for the second quarter were already running 14% higher over the same period a year ago.

It did try to temper expectations for the full year, though, saying that gross profit margins for the year, while improving, won't be as hot as the first quarter.

Housing Recovery Play Not a Secret

Investors have been all over the housing recovery stocks for the last year. The improvement in the housing market isn't exactly a secret anymore.

Shares of Havertys have soared since last summer to multi-year highs.

But, its valuation still isn't excessive. It's trading with a forward P/E of 22 and a price-to-book of just 2.0.

Consumer sentiment is finally reaching pre-recession levels which means that people believe the economy, and their own personal fortunes, are improving. The rise in stock and housing prices have a lot to do with that.

During times that you're feeling better about your financial situation, that's when you're likely to buy big ticket items like new furniture.

For investors looking for a way to play the housing recovery outside of the homebuilders, Havertys is one stock worth checking out.

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Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec.

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