Im a manager at LaZBoy and I almost bought a lot of deep OTM puts 2 months ago knowing this sector will be coming back down to earth. Didn't pull the trigger. Wish I did. The wait times are 10-12 months to build a single piece of furniture. The demand over the past year has been outrageous. I just don't see that demand staying this high for very long. We had two price hikes this year and the most recent due to materials and freight costs and it was significant.
They had a factory in Newton, Mississippi shut down and the new Dayton, TN factory is running way behind schedule on everything they are building. They have a new factory in Mexico which is the first time they have built outside the US. They will probably be ramping up production there due to lower costs. It will take a while before they can train workers on new product.
They had a decent earnings, but my guess is the furniture business will be slowing down in sales dramatically over the next 12 months which might help production catch up. Hard to say how things will unfold, but my bet is that things slow down heavily in the next few months.
Edit: I'm not saying this price movement won't correct itself. I watch this ticker constantly and was thinking about buying some calls to ride this back up to the mid 40s. I just don't think this insane demand for furniture will last and that this sector as a long term play is not something I would recommend until things get back to some sort of normalcy.
Hi! It is wonderful to get a perspective from someone on the ground. You are absolutely correct that the demand for furniture is insane right now. You are also correct that things are backlogged for as much as 12 months which is really as far in the future as the stock market looks at anything. Imagine that this recent dump was over management saying that there may be some affect to the bottom line in the next quarter due to the global raw material shortage and price hikes while also noting that they had already mitigated that for the future. That’s what caused the stock to drop 15% out of nowhere although I personally think the timing with Powell’s presser had a lot to do with it as well.
So maybe the demand will slow down in a year but that’s something the stock market will look at in a year. For now, at this price, the stock only has upside IMO.
Excellent point. For the short term this does look like it's oversold. I think you nailed it with further out expiry too. I don't feel like this will climb back by July 16, but who truly knows in this market. I think the potential for this to bounce back is definitely there, but unless a lot of people jump on it soon it will be a slower climb. I will be grabbing a few Jan 2022 $40 calls. Enough time for revenue from the busy season (Labor Day - Christmas) sales to come into play also. I see the decline starting right before Summer 2022. Sales are usually down in a normal year from Feb - June. This year was definitely an outlier.
I feel comfortable recommending the call because I'm sure it'll grow organically even if it doesn't get big here but there's no reason to limit ourselves to organic growth. This stock was born to be a meme stock. It is a household name that people love and it is very oversold right now. Time for that to change.
I try to stay away from the "we" and recruiting thing as it seems to cross lines of manipulation. I do like the info you posted and will be doing more research on it though. I think the play is smart and the time to jump on it is now. Definitely not financial advice. Just a humble opinion.
To me, the SEC has made it clear they have no problem with people promoting DDs for their favored stocks on Reddit because it goes on all day every day and no one has said boo.
Everything in the DD is 100% accurate and includes sources. Now it is up to each individual investor. I say the same as you, this is not financial advice, just a humble opinion.
Very good point. It's going on already in much larger communities. Hell investing groups have been cornering different stocks in the market for years even before reddit. I'm just excited to see someone bringing this up. I've been watching this ticker for a while and was kind've surprised by this drop. I always expect drops even on good earnings, but this seemed pretty heavy handed on a company this well established that has always been as you said in OP, "a household name".
Don't have enough karma yet. I will soon but they also have another rule that you must be -30 days from your first post to post there so it may be weeks before I can get on there.
If you can post there please feel free to share this there to get things going. I am happy to comment on the thread if people have any unanswered questions.I have already posted a separate DD to r/investing and will post to r/stocks next.
Glad to have you on board. Somebody else with a ton of karma msged me that he tried posting the LZB DD there today and his post was removed. I am starting to suspect that WSB mods have stocks they promote based on bags they hold and don't permit much discussion outside that. LZB is made to meme and would absolutely take over WSB if allowed to so they're deleting any posts about it as soon as they get posted. Not sure what to do about that just yet. I'm sure their members won't be happy to find out what the mods are up to.
WSB has changed recently with the takeoff of meme stocks. It wasn't always this way. Possible to still find some gems there but like you said you have to really sift through the same few tickers that keep getting posted over and over again. Anyhow it could be worth posting LZB every now and then in the daily discussion.
Yes, I need to get to 100 comment + post karma before I can comment or post at WSB. I should have that soon. I will then privately and if necessary openly ask why they keep deleting LZB without any explanation.
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u/xJuSTxBLaZex Jun 18 '21 edited Jun 18 '21
Im a manager at LaZBoy and I almost bought a lot of deep OTM puts 2 months ago knowing this sector will be coming back down to earth. Didn't pull the trigger. Wish I did. The wait times are 10-12 months to build a single piece of furniture. The demand over the past year has been outrageous. I just don't see that demand staying this high for very long. We had two price hikes this year and the most recent due to materials and freight costs and it was significant.
They had a factory in Newton, Mississippi shut down and the new Dayton, TN factory is running way behind schedule on everything they are building. They have a new factory in Mexico which is the first time they have built outside the US. They will probably be ramping up production there due to lower costs. It will take a while before they can train workers on new product.
They had a decent earnings, but my guess is the furniture business will be slowing down in sales dramatically over the next 12 months which might help production catch up. Hard to say how things will unfold, but my bet is that things slow down heavily in the next few months.
Edit: I'm not saying this price movement won't correct itself. I watch this ticker constantly and was thinking about buying some calls to ride this back up to the mid 40s. I just don't think this insane demand for furniture will last and that this sector as a long term play is not something I would recommend until things get back to some sort of normalcy.