Stockchase Opinions

Leslie Lundquist Hardwoods Distribution HDI-T SELL Jul 25, 2007

A distributor of hardwood to manufacturers of hardwood products, not flooring. About 70% of its business is in the US, so there could be a currency problem. The slowdown in housing in the US is a negative.
$6.500

Stock price when the opinion was issued

merchandising lodging
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COMMENT

High-end hardwood. Big participation in the US housing market. He is looking for stocks that are not just commodity, but are a bit value add, and this one fits into that category. He is still bullish on this.

PAST TOP PICK

(A Top Pick March 28/16. Up 1%.) This had an amazing 2015, but 2016 not so much, although fundamentals have been very strong. They transformed their business in the last 6 months. Made an acquisition of Rugby. They used to only sell flooring and value added hardwood lumber goods, but now it has thousands of skews of different products such as commercial real estate, construction, etc. mainly in the US. This is still a Buy.

DON'T BUY

It has a 1.5% yield. They distribute the end products that go into boats, RVs and kitchen cabinets. It is tied to the housing cycle and the demand for RVs and other luxury items. He would be more comfortable with pure play lumber stocks.

COMMENT

Latest results were a disappointment, and the stock sold off. Analysts have said the 9% increase in earnings, even though sales went down 4%, is something not to get worked up about. Because of the higher ranking and what the analysts have said, he thinks this will do quite well.

COMMENT

Value play or value trap? This is not a value trap. It builds wonderful kitchenware and stuff to entrap the American consumers. He’s in this for the long-term.

COMMENT

This does high-end panelling, flooring, etc. They have a very good grasp of the high-end market. Chart shows several years of higher highs and higher lows.

PAST TOP PICK

(A Top Pick Dec 20/16. Up 8%.) This sells value added lumber products, mainly in the US, but also in Canada. We are just at batting practice for a housing boom in the US. There are more millennials then there are baby boomers, so this company will benefit, as 60%-70% of their revenues are tied to residential housing.

TOP PICK

Home Building. They have quite a bit of operations in the US. which he thinks are going to benefit from the tax bill that was passed. Really good quite consistent company as well. (Analysts’ price target is $24.50.)

WATCH
It has returned to previous support from November. He would look at the $9 range. If it breaks below that they we have a problem, otherwise it will base at this level before going up to $16.
TOP PICK

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. The sector and in particular the company has shown good momentum. Good cash flow off-sets their stretched balance sheet. Cheap on valuation. Unlock Premium - Try 5i Free