Opinions The Panic-Proof Portfolio (Stockchase Research)
La-Z-Boy Inc.LZBTOP PICKAug 19, 2021
Stock price when the opinion was issued
As of Jun 01, 2026. Market Open.
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Lumpy during pandemic, supply chain now sorted out. Strong management. Earnings have grown average 15% over last 10 years. 13x earnings, still a good opportunity. Buying back franchises will enhance profitability.
Gordon ReidAverage US house price is down only 3% from highs. Homebuilders are getting through this downturn quite nicely, and the homebuilders index is hitting 52-week highs. LZB will benefit. Less than 10x earnings, solid dividend, revenue will do well coming off supply chain issues. Yield is 2.56%.
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Don LatoChart shows this is trying to get through its high of December. It has a great little trend underneath that. Has been pretty volatile. Indicators are sort of turning up. This could possibly come back to $28 still, which is where the long-term trend is, but he doesn’t expect that to happen. There is a good level at around $30 you could look at, or you could wait for the breakout above $33. Take a half position, because a lot of times breakouts have to come back to get retested.
He likes it from a macro point of view. From a company specific point of view they are doing good things. They want to grow their business by 400 stores in 5 years. Their margins are improving from 2.5% to 5% and he thinks they are on the way to 7%.
Gordon Reid(A Top Pick Aug 26/15. Up 10.69%.) This is really a story about the housing market. There needs to be a lot more household formations to satisfy the population growth. 5 years ago, net margins were about 2%, last year they were 5%, and by the end of the decade he thinks they will be over 7%.
Gordon ReidThis is a play on the housing recovery, which is very, very nascent. Household formations are still well below historic levels. This company is going to be a beneficiary of that. Very, very well-managed. You are going to see a higher beta on a stock like this, and he would suggest that you stay with this over the long-term, and not be too sensitive to the ups and downs. Thinks it will pay you over time.
Gordon Reid
