Monday, May 13, 2013

"Everyone wants hardwood floors. So, why wouldn't you own stock in Lumber Liquidators?"

Dow Jones Industrial Average  15,118.49 (UP and all-time HIGH)  Week ending 05-10-2013

It never fails to amaze me when I watch these home and real estate TV shows and the first thing they say when they walk in is, "I love these hardwood floors." Everybody wants them. You could go get them installed by Home Depot or Lowe's, but a better idea is to buy them from the specialists that sell nothing but hardwood floors. 

Lumber Liquidators Holdings Inc. (Symbol LL, $89.01) 

LL, has a Return on Equity of 24.03% and a PEG ratio of 0.4956 in Y-Charts and 2.28% in Smartmoney. This brings up a good point and that is that when you do your homework and research stocks, you should check multiple sources to get your stats before you go ahead and make a stock purchase. (Make that Rule #7). 

 Lumber Liquidators is projecting earnings per share of $2.43 for 2013 and $2.92 per share for 2014. The company has ZERO Long Term debt and because of its rapid growth, it pays no dividend. 2012 Revenues came in at $856 Million, so it's not even a Mid-Cap stock yet. The PE on the stock is currently 36.77, so you might want to wait for a market correction to buy or just take a small initial position, and then add to it later. However, Quarter year over year earnings were up 96.55% and quarterly gross margin is 40.38%. Hmmm?

The 5 year sales growth of the company has been 13.74% and the 5 year earnings growth rate has been 21.07%. 

Give me carpet with 3/4 inch padding to keep my feet warm in the winter, but if I'm buying stock , give me LL with a one year Total Return of 220.34 % and a 3 Year Total return
of 199.70% and I'll just put on the warm socks!

This is the ideal stock for the Growth segment of your portfolio. Just look to buy in at a good time. 

On another note, Louis Rukeyser is my mentor, but Alan Abelson of Barron's, God rest his soul, was my muse. If I could ever be a tenth as good as him at seeing the stock market and writing about it with such wit, genius and unbridled sarcasm, I would consider myself a great success.  Wall Street has lost a great voice, and I personally will miss him. 

Alan Abelson - Legendary Columnist - Barron's Magazine -"Up and Down  Wall Street"

 Good Night .... Freewilly

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