Williams-Sonoma, Inc. (WSM), Bed Bath & Beyond Inc. (BBBY), Pier 1 Imports Inc (PIR): Three Stocks You Might Want to Buy

Pier 1 wants to be tier 1

Pier 1 Imports Inc (NYSE:PIR) is a smaller home furnishing company that has big plans for the future. It is currently going through a three year enhancement plan. The plan will invest $100 million to improve the quality of Pier 1 Imports Inc (NYSE:PIR)’s real estate through new store openings, relocations, remodels, and refurbishments. So far, they have refurbished 253 stores which has improved sales per square foot from $184 to $198.

Pier 1 Imports Inc (NYSE:PIR) has also made improvements in its technology systems and launched an e-commerce website. In addition, it has formed a partnership with Alliance Data to create a rewards system. 25% of total U.S. store sales are attributed to this system. While these new improvements have helped revenue grow 15.70%, they have been expensive.  Pier 1 recently posted a quarterly earnings drop of 46.40%.

Currently trading at $23.34 with a market cap of $2.43 billion, Pier 1 Imports Inc (NYSE:PIR) is using the $124 million of cash flow it generated to reinvest in the company so it can continue with its growth plans. Pier 1 has announced a $0.05 per share cash dividend and a $100 million share repurchase program to return value to shareholders. Pier 1 Imports Inc (NYSE:PIR) has a long way to go before it’s the size of Williams-Sonoma or Bed Bath & Beyond. But, if Pier 1 continues to grow revenue through store improvements, promotions, and e-commerce, then the company could see new heights.

Conclusion

With the housing market growing, Williams-Sonoma, Inc. (NYSE:WSM), Bed Bath & Beyond Inc. (NASDAQ:BBBY), and Pier 1 Imports Inc (NYSE:PIR) can expect to have higher sales and increased profits. Of these companies, I like Williams-Sonoma and Pier 1 as buys. Williams-Sonoma has strong brands and is working on international expansion to grow revenue, and Pier 1 has a plan to grow its business across America. Both companies have solid strategies for growth and I think they’ll achieve it if the economy continues to improve. In the end, these stocks might look better than the tasteful furniture they sell.

The article 3 Stocks You Might Want to Buy originally appeared on Fool.com and is written by Ben Popkin.

Ben Popkin has no position in any stocks mentioned. The Motley Fool recommends Bed Bath & Beyond and Williams-Sonoma. Ben is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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