Leon's Furniture (LNF-T)

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Would not do anything for their tender offer. They have committed to buying back $200M of their shares. The stock is cheap with a good outlook. The company knows its business and is committing $200M to prove the stock is undervalued. Unlock Premium - Try 5i Free

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Comfortable with a long-term position with its strong market share. Trading at 10x forward earnings, which is cheap compared to its history. This gives some downside protection. They announced a 10% stock buyback plan. Supply chain issues seem largely priced in. Unlock Premium - Try 5i Free

(A Top Pick August 3/2017, Up 4%) A cult stock. Not that liquid. Great company, along with the Brick. A tough business, but they are the best. Own a ton of real estate under the business, which they will eventually do something with. Hard to buy furniture online, so they have some protection. Earnings next week, he’s assuming decent numbers.

Done right, furniture is a great business. Most of them are private because they generate so much cash that they don’t need to go public. Leon’s is one of the best furniture businesses in the country. However, the furniture business is cyclical with the housing market. To the extent that housing purchases or renovations might slow down, this company will suffer. At this time, investors should wait to buy it later. It is a great business, but the cycle is turning.

He has owned this for a long time and thinks they are a survivor. Leon’s will service Sears appliance contracts and has great real estate holdings that may eventually be spun off. Yield 3%. (Analysts’ price target is $20.50).

Somebody bought this at the old high of 2015 want their money back. You have to get through those guys. Not everybody is going to sell, but there is a certain amount of selling pressure in and around the old high. It is probably trying to break through that old level. He would probably approach this somewhat optimistically, but wouldn't throw his full allotment into it. There is still a chance that the break out won't last. You need another week or 2.