In my view, there's no sense in buying HD vs. LL unless you're a multi-millionaire or a pensioner, and paying over 25x eps for a mega-cap is fine because capital preservation is the goal. Home-Depot is a good stock and it's probably a great idea if it's money that you need to retire etc.... BUT!
HD's market cap is 1.55x revenues
LL's is what?.... 0.42x revenues, zero-debt, and EPS weakness will prove temporary.
Sure, LL is riskier, but not as risky as Cramer implies since their exoneration from CARB and recent favorable court rulings. HD could gain ~10% in the next year, but LL could go up 100% with any decent earnings reports. If LL had a five-cent quarter this would go over $20 the next day. It will take YEARS for HD to go up those percentages. Of course that won't happen in Q1 because they'll have too many unusual expenses like legal costs, but that too shall pass. People reading the Q1 report will give LL a lot of leeway.
I wouldn't "bet the farm" on LL, but it's been incredibly resilient over the last month and seems poised for a breakout.
That's nice to see this maintaining yesterdays gains. Prior rally's like yesterday were followed by a big hangover in past months.
There's nothing stopping this from going higher into earnings.
I guarantee there are a few that already know what Q1 revenues were and the stock is doing well. I hate using a cliche, but we saw the same trading action before the announcement that LL won the Prop 65 case and I said it was a canary in a coal mine. There are undertones in what we're seeing now.
I think it's shocking that short positions had increased as of early-April. Those bets were likely placed before LL won in court on the Prop 65 case.
I was calling for a $15 "normal" before earnings, but this has whipped higher even faster than I had imagined. For what it's worth, the SP jumped up to $21 in October and the outlook wasn't as good then as it is now.
This has been going up relentlessly for several days. This close to earnings, I wouldn't doubt that there are some big-money players that already know the outcome of Q1.
Yeah, that's specifically one example when I've discussed LL's problems too, and you know what? Jack in the Box was rated the cleanest fast-food chain 2 years later. Just like AUDI recovered from a slam article by 60 minutes in the late 1980's. No big company goes forever without problems. LL has taken its licks, but it will recover too.
That's my long thesis almost identically. Without the bogey of any product liability issues this is worth 2x-3x the current sp.
This continues to trend higher without any news. Somebody is accumulating here and the trading action indicates that longs are content holding or adding. There is no selling conviction when this goes red and these green-shoots continue to happen, legitimizing the trading range creeping higher.
I've been investing for a long time and this is exactly the trading action you'll see before something breaks higher. I have little doubt that this reaches a $15 "normal" before Q1 earnings.
I've thought about trading this around at the current price level, but ultimately I've told myself that I really need to buy-and-hold here.
It's just silly to trade this stock in my opinion. We're looking at a zero-debt company only trading at slightly more than 1/3 of revenues that has been essentially cleared of any wrongdoing that brought the price down to begin with. Why risk selling now and letting the stock run away from you?
Letting this stock sit-and-stew in a portfolio is going to be a money maker without any question. If LL was saddled with loan covenants and cashflow problems I might feel differently, but that isn't the case.
I'll say this to anybody short here. This is not a short that you want to hold for a long time and it has shown it has been able to gap-higher TWICE within the last month and hold its gains. That is simply not the kind of technical's you want to see if you're short and that has nothing to do with any personal vendetta to anybody short.
There are analyst that have their PT as high as $32 here now. Just sayin'
Also, this is going to close out the week at over $14, solidifying the current trading range.
I think years is an exaggeration. The public forgets and/or assumes that actions have been taken to fix the problem after a scandal. People are constantly hearing about safety issues on the news, even from respected companies often.
I think that most people still expect Q1 to have weak revenues and earnings. That is the only reasonable justification for being short at this juncture, but it's also expected, so it's not going to surprise anybody (aka. won't hurt the stock terribly).
LL's zero-debt balance sheet gives them a tremendous amount of flexibility in the short term.
A break-even quarter (perhaps even with NON-GAAP "normalized" numbers) will push this to $20. ANY green quarter with GAAP accounting pushes this to $30. That's triple-digit losses on a short position now.
This is an absolute powder-keg with any positive news right now.
Something else worth mentioning is that brokerages will allow LL stock to be bought on margin again with the victories they have had. The SP has gotten continuously better despite the fact that brokerages won't loan money to buy shares.
The court rulings, CARBS exoneration, and CDC's recommendation to leave the flooring in place all beg to differ with your opinion sir.
The prognostication that LL would be in the green by lunch-time has proven correct too by-the-way.
Yeah, that's just silly to expect a catastrophic outcome now. The big-judgment and product recalls are failing to materialize and there's almost no chance they will. LL has no debt on the balance sheet, so there's no plausible chance of a doomsday scenario here.
Any reasonable person would be covering on the dips right now and unwinding their position if they were short.
I'd think that LL could simply offer a low-ball settlement offer on the class-action and move on at this point.
Once the class action is dismissed they've got complete absolution and we're left with a company trading at about 1/3 of revenues with NO DEBT. This goes to $30 this year without a doubt.
Sentiment: Strong Buy
The class action suit in Virginia's eastern district court is still ongoing, but numerous plaintiffs had already dropped their case against LL. That was before LL won this case.
The class action plaintiffs are essentially screwed with this ruling and an exoneration by CARB.
Sentiment: Strong Buy
Yeah, the pull-back was on paltry volume. I think small-time traders are thinking $13 is "safe". When substantial trading volume happens this is running up quickly.
These little green shoots could be a canary in a coal mine.