ChristopherCarrollSmith

Deep Value and Bullish Sentiment in La-Z-Boy

Long
NYSE:LZB   La-Z-Boy Incorporated
My largest single position right now is La-Z-Boy , and the consolidating price action the last few days is telling me the time may be right.

Deep Value

La-Z-Boy offers a 2.1% forward dividend yield and currently trades at about 10 forward P/E, .74 forward P/S, and a fantastic 5.6 P/ FCF . The low price multiples on this wonderful cash cow are well below the stock's five-year median. I estimate a whopping 38% upside to the median multiple of the last five years!

If La-Z-Boy's trading at a discount , it's not for lack of growth. We're talking 4% earnings growth, 4% dividend growth, 1.7% sales growth, and 8% free cash flow growth, on average, since 2017. In addition to paying dividends, La-Z-Boy has also consistently bought back shares. Of the value stocks I follow, La-Z-Boy is in the 10th cheapest on a price ratio basis (trailing and forward P/E, P/S, P/D, P/ FCF ) and the 6th cheapest on a price-to-growth ratio basis (PEG, PSG , PDG , PFCFG).

La-Z-Boy has been innovating lately. You get an average of 4.5 new patents per year per billion dollars of market cap, making this a relatively cheap technology play. (Did I just call a furniture company a technology play? Yes, I did.) S&P Global gives La-Z-Boy an average fundamentals score of 88.25/100. It scores middle-of-the-road on ESG . I rate the earnings outlook a 5/6, with projected future growth and mostly positive recent forecast revisions.

Bullish Sentiment

The average analyst score on La-Z-Boy is 6.4/10, putting it in bullish but not strongly bullish territory. However, options traders are highly bullish on the stock, with open interest sitting at 0.15. That's the most bullish open interest of any stock I follow. Options trading volume is quite bullish as well.

News on La-Z-Boy has been mostly positive. Last quarter's earnings and sales handily beat estimates, and La-Z-Boy is upgrading its Neosho, MO manufacturing plant. The stock's been beaten down due to supply chain troubles and materials costs, but with the stock near strong support and open interest so positive, I think the selloff may have exhausted itself.

Support-Resistance

In technical terms, we've got upside to at least the 20-day exponential moving average at $35.04 per share, with strong support from the 200-week at 32.85. That's a net-positive reward-minus-risk of 3.9%.
Comment: Congrats to those who took the trade, especially with a short-dated call position. LZB up over 3% today. Likely to top out for the day at 34.49, 34.64, or 34.82.
Comment: We've had a decent bounce from 200 EMA. Now we're at the true decision point with some resistances ahead.

Comment: Solid 3% gain today as we surged through 20-day EMA resistance.
Comment: There was a bit of a dip on the earnings report (small earnings miss, large sales beat), but strong rally today. This remains my largest long position, FWIW.
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Comments

Thanks for sharing your investing positions so openly! This was featured in Editors' Picks
100 coins
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@TradingView, thanks! Much love!
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Just wanted to circle back and say thanks for this one! Took profits yesterday on it for a nice gain. :)
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@jenric1007, congrats! :) I trimmed a third of my position in it yesterday myself, but am still holding the rest!
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jenric1007 ChristopherCarrollSmith
@ChristopherCarrollSmith, Check out CPB. Good dividend stock. Looks like to me it's setting up a cup and handle on the smaller 2 hr timeframe. Entry could be taken once breakout of the handle is confirmed with a SL @ $42 and a conservative PT of about $45.75. Decent risk vs reward
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I wouldn't open a position here.

Well under the 200EMA, Death Cross, RSI trending down.

I won't open a put, because of that obvious resistance level.

.. but the main trend is down, into a triangle continuation pattern. That's not a great place to go long.

Good luck!
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@JebusLives, I'm more of a pick the bottom kind of trader than a wait for confirmation kind of trader. Requires a little more gritting of teeth, but is also more rewarding when you get it right. It takes all kinds. Cheers!
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JebusLives ChristopherCarrollSmith
@ChristopherCarrollSmith, If there's good news here, it's that the stop loss can be nice and tight to minimize losses.

You can be sure I'll be watching this one to heckle you more, or lament my mistakes.. :D

More specifically I'm interested here because I'm noticing that companies that aren't worthy of the S&P 500 are struggling, I'm interested to see if this can catch a good bounce, or if it's going to get caught up in a broader decline.

Perhaps yesterday's fed meeting cleared the way to success here. Silly me passed on my SPY calls this week.
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@JebusLives, my view on small caps vs. large caps here is that small caps overcorrected and are in the process of a bounce:

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Great analysis! I've had my eye on LZB for a couple of weeks now too!
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