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What’s Up With Tempur Pedic & Sealy?

Stock and stock option volume for Tempur Pedic (TPX) and Sealy (ZZ) popped up on the radar yesterday. Tempur Pedic’s stock price was up 11% yesterday and Sealy’s was up 6%. After hours, Sealy reported results which were in line with expectations. Sealy said in their conference call that they are beginning to see signs that consumers are beginning to recover from the recession.

Tempur Pedic manufactures, distributes and markets bedding products worldwide. Tempur Pedic is known for turning a technology developed by NASA for relieving the tremendous g-forces experienced by astronauts into a bed mattress providing superior comfort.

Sealy manufactures and markets bedding products as well. Sealy’s brands include: Sealy Posturpedic, Stearns & Foster and Basset.

Could the interest in Tempur Pedic and Sealy yesterday be caused soley by Sealy’s earnings and conference call or is something else in the air? We could certainly see some consolidation in the bedding market, wouldn’t be too surprised to see Sealy or Tempur Pedic being acquired by another company or see Tempur Pedic make an acquisition.

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Tempur Pedic’s stock price has been doing very well over the last six months and Sealy’s has been very volatile over the last year:

TPX Chart

ZZ Chart

Can’t really recommend a covered call for Sealy in their “condition”, but a covered call investing position for TPX is in order. Currently, a covered calls position is available for TPX for October expiration with a %if assigned return of 8.8%. To enter the covered call investing position an investor would purchase TPX in multiples of 100 shares and sell one call option TPXJD (OCT 20) for each 100 shares of TPX purchased.

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[tags] NASA, bed mattress, Sealy Posturpedic, Stearns & Foster, Basset, TPX, Tempur Pedic Intl. Inc., ZZ, Sealy Corp. [/tags]

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