Today I purchased a chunk of Canadian furniture chain Leon's (LNF). The stock is so illiquid that I could see my 170 share purchase add to the running total for the day and I saw a chart blip with my name on it on Google Finance. I bought the shares at $9.88 and I will get the $0.20 per share special dividend that Leon's is paying out in December. I have to admit that I have been looking at the stock for a few years and I was surprised to see the valuation it has changed hands at in the last few months. The special dividend did catch my attention but I do think the shares are good value at 12.5x depressed earnings. Several retail stocks with inferior balance sheets to Leon's have much higher multiples in hopes of recovery. I think Leon's stock has room to run and management has navigated through tough times before.
I will be holding for the long term, with these as my primary reasons for purchase:
- 'Go to' name in Canadian furniture & appliances with large, well located, and well laid out new stores
- Always generate return on equity north of 15% and very low debt level
- Yielding 2.8% and have a solid history of dividend growth
- Conservative, family run, shareholder friendly business with room to grow with potential expansion in under-serviced markets in Western Canada
This now makes up 2.2% of my portfolio.
11 comments:
Nice purchase. I know that Avenue Investment Management is a larger holder this stock. They have been buying it for their clients for a long time and have recommended it before on BNN.
www.thinkdividendsblog.com
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Nice buy but BMTC Group (GBT.A) would have been a much better buy...
Merci!
Leon's is a very similar story to The Brick. I bought brk.un for my TFSA and things have been looking pretty good. It seems like when every residential homes start to sell, furniture starts to sell as well. You should check out the Brick if you are into household goods investments. The shares have pulled back a bit. I picked them up for $1.05 .
I Agree with the tweet - I want it cheaper. I think there are better places to put my dollars in the meantime. Good post
Je seconde Mr. Langevin.
The ROE on BMTC is extremely high, and it's defenitely the first name that comes in mind when talking about furniture purchase in quebec.
It went up a lot since I bought it in february but I think it's still a good buy as my target price was 40$ back then, would probably be higher by now though with the new Q3 results.
Merci à tous pour vos efforts en français! ;-)
Thanks everyone for your french writing efforts!
Leons is still not a bad choice in my mind but BMTC is a much more profitable business. Therefore, If I had to choose a furniture compagny in canada for my portfolio, I'd choose BMTC.
For those speaking french, I suggest you to read this:
http://journal-y.blogspot.com/2009/11/un-titre-peu-connu-rentabilitee-elevee.html
MG -- Please update your non reg. portfolio holdings when you get a chance. Leon's is not present.
Thanks
MG- Where you at man?
I would never touch the Brick because I feel that they sell low quality goods and have poor customer service and a poor reputation.
Does BMTC have the potential to expand outside of QC? If not, their potential is very limited.
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