Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of recliner specialist La-Z-Boy
So what: La-Z-Boy's solid second-quarter results -- profit more than doubled to $7.9 million on strong upholstery sales -- suggest that demand is indeed roaring back from a prolonged slump. The company's gross margin even widened from 29% to 31.1%, giving Mr. Market plenty of reason to be optimistic about its long-term profitability.
Now what: I'd be cautious about riding this recent wave of momentum. "We expect the operating environment for the industry to remain challenging based on low consumer confidence levels, a depressed housing market and volatility in the financial markets," Chairman and CEO Kurt Darrow said. While La-Z-Boy fully expects to navigate through those choppy waters successfully, the stock's recent surge -- nearly 70% over the past two months alone -- leaves little room for error.
Interested in more info on La-Z-Boy? Add it to your watchlist.