Should You Invest in Lumber Liquidators?

PHOTO CREDIT: Yahoo Finance

OVERVIEW

Lumber Liquidators Holdings Incorporation is a company based in the United States. The company designs, sells, and installs flooring products in the United States. The company offers hardwood, laminate, and other flooring products in the country. The company was founded in 1994.

Why You Should?

1. Lumber Liquidators is a great reopening play in an investor’s portfolio. The company was hurt by the pandemic as they saw sales fall due to people canceling or delaying building and remodeling projects. However, the company will continue to grow once this pandemic is over. This will benefit the company.
2. A Biden administration will benefit the company as Biden looks to incentivize the building of new homes and homeownership. This will cause an increase in the demand for flooring products and this is what will ultimately benefit the company and its investors.
3. Another factor that will benefit the company is the booming housing market. Houses need flooring products and services, something that Lumber Liquidators offers to its customers. As more houses are built and sold, the company will see rising sales. This will also benefit investors in the company.

Why You Should Not?

1. The company faces tough competition in the constriction and flooring business from companies like Home Depot, Lowe’s, ACE, and many others. This competition has hurt the company in the past and might continue to hurt the company and its investors in the future.
2. The COVID-19 pandemic has hurt the company as they saw falling sales numbers as customers put off new construction and remodeling projects in order to wait for better economic times. Supply chain issues have also plagued some parts of the company. This pandemic has hurt the company and its investors.
3. Rising lumber costs have also hurt some of the company’s earnings as they saw rising costs associated with offering certain flooring products to their customers. Though price increases have worked, the company might see falling sales as customers wait for lumber prices to fall before purchasing flooring products.
4. The company has had many controversies in the past which resulted in massive fines. From securities fraud to selling flooring products with higher levels of carcinogens, the company has lost the trust of many customers and investors (which explains the flat stock price). This has hurt the company and its investors.

MY OPINION

I think that investors should stay away from Lumber Liquidators due to their past controversies, tough competition, negative impacts from the pandemic, as well as rising lumber prices. However, the company will see positive impacts from a Biden administration, a booming housing market, as well as its position as a good reopening play.