Can Lumber Liquidators Stock Keep Going After Last Week's 13% Pop?
One of last week's biggest gainers wasLumber Liquidators(NYSE: LL), moving 12.9% higher despite a lack of material news. The hardwood retailer has been buoyant since reporting better-than-expected quarterly results in late February. Lumber Liquidators stock is now trading 33% higher year to date, a welcome breath of fresh air for investors after suffering through three years of sharp annual declines. The shares had plummeted 75% from the start of 2014 through the end of 2016.
The last noteworthy news out of Lumber Liquidators happened late in the prior week, when it introduced the new Click Ceramic Plank line. The waterproof and wood-like ceramic planks click together, but unlike standard laminate solutions, the evolutionary ceramic product is less resistant to water, dents, and wear. There's also no need forgrout, mortar, glue, and power tools. These suckers look good and they're easy to install.
Click Ceramic Plank at Lumber Liquidators. Image source: Lumber Liquidators.
Flooring the competition
Click Ceramic Plank is being billed as "industry exclusive" to Lumber Liquidators, but we know how things go in this field. If the product's a hit, you can be sure that everyone will hop on the trend.
For now, it's great to see Lumber Liquidators leading the way. The company had beenreeling since 60 Minutes ran a scorching piece in early 2015, alleging that the retailer was bringing in laminate flooring from China with potentially dangerous levels of formaldehyde. The stock was already sliding through 2014 on valuation concerns amid sharply decelerating sales growth.
Lumber Liquidators would rattle through five consecutive quarters of year-over-year declines in sales. Expansion wasn't enough to offset the double-digit percentage slides in comparable-store sales. Then the trend reversed during the latter half of last year. Lumber Liquidators has now posted back-to-back quarters of growing revenue and expanding comps.
Still, losses continue at Lumber Liquidators, and we're eight quarters into that unwelcome streak. Customers have been slow to forgive Lumber Liquidators, even as it moved away from China-sourced laminates and shook up its executive ranks.
The road ahead is still long. Comps were positive in the latest quarter, but that was a matter of higher order values that pushed the metric out of the red, since traffic levels were actually negative. Good luck warning Lumber Liquidators bulls to be cautious, though. The stock hit another 52-week high on Friday. Those long the stock won't mind seeing the shares climb higher despite a clear news catalyst. They suffered through the brutal slide when the stories were rough, and sometimes no news is good news.
10 stocks we like better than Lumber LiquidatorsWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Lumber Liquidators wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of February 6, 2017
Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Lumber Liquidators. The Motley Fool has a disclosure policy.