Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, hardwood flooring retailer Lumber Liquidators Holdings (NYSE: LL ) has earned a coveted five-star ranking.
With that in mind, let's take a closer look at Lumber Liquidators' business and see what CAPS investors are saying about the stock right now.
Lumber Liquidators facts
||Toano, Va. (1994)
||Home improvement retail
||CEO Jeffrey Griffiths (since 2006)
CFO Daniel Terrell (since 2006)
|Return on Capital (Average, Past 3 Years)
||$33.4 million / $0
||Lowe's (NYSE: LOW )
Home Depot (NYSE: HD )
Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 96% of the 614 members who have rated Lumber Liquidators believe the stock will outperform the S&P 500 going forward. These bulls include kenjotto and All-Star TMF1000, who is ranked in the top 0.5% of our community.
Earlier this month, kenjotto tapped Lumber Liquidators as a tempting turnaround play:
They seem to be struggling with some execution issues, but overall they have a strong balance sheet and a competitive business model. ... Once we get through this scary softpatch, and people go back to investing in their homes (either cause they are stuck there or think they can sell) they'll be knocking on LL's door.
Lumber Liquidators even boasts $33 million in cash on its balance sheet with zero debt. Meanwhile, main rivals Lowe's and Home Depot sport debt-to-equity ratios of 0.4 and 0.6, respectively.
CAPS All-Star TMF1000 elaborates on the bull case:
LL is quickly building stores. They have an advantage. Their stores are smaller, cheap to open and they can open many of them in large or small markets. Their stores ramp up quickly and are profitable very quickly. They have opened 339 stores without picking up debt. That is always good. ...
I like leaders, but leaders in a weak industry can face problems. [T]hey are affected by home remodeling activity, employment levels, housing turnover, real estate prices, new housing starts, consumer confidence, credit availability and the general health of consumer discretionary spending. No one can know the direction of these many complex economic issues that affect this leader. ... But their growth prospects are huge. As they execute provided they can, this could be a big winner, especially if the housing market improves.
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