Leon's Furniture (LNF.TO)

(A Top Pick Feb 11/14. Up 1%.) Took half his position down, because it got ahead of itself at around $18. A fantastic company in one of the worst businesses. Furniture is terrible, so you want the best in class. About 30% of their stores are in Alberta, so there is expectation that furniture sales will go down. There is a partial truth to that, but they are well diversified geographically. He would probably be a Buyer rather than a Seller at this point. It’s early days, but there will be integration and synergies coming from the Brick acquisition.

(Top Pick Jan 20/14, Up 37.08%) Management owns a very large percentage of the stock. LNF-T owns the properties under the stores. He sold some off because it ran up so far and would buy it back on a dip.

(A Top Pick Feb11/14. Up 31.75%.) Has held this for 11 years and it just keeps clicking away. Not well covered and a little expensive. With oil prices down there is more change in the consumer’s pocket, which could lead to higher furniture sales. They acquired the Brick and are finally getting some synergies out of it, which is probably going to drop to the bottom line. He thinks there is expansion at the EPS level. Also has valuation in the real estate they hold. It might have a little bit more room, but he would be really cautious at this level.

(Top Pick Dec 27/13, Up 35.63%) They bought The Brick and now you are seeing benefits. It is not a complicated story. A great brand name and they continue to pay a good dividend yield as they continue to grow their business. They own a lot of property under their stores and you get the business for free.

(Top Pick Feb 11/14, Down 2.76%) Their earnings came out light so it didn’t pop. This is the best company in a bad industry. Thinks we see earnings released in the next week. You are finally going to see the integration with The Brick and you will see the cost savings start. They also have a bunch of real estate that some day they might sell off. He still likes.

(Top Pick Aug 07’13, Up 23.75%) He has held since day 1. 75% of the stock is owned by the Leons family. Their transportation network will be a lot more efficient. Consistent earning. It is one of the toughest businesses. Their valuation is not too high. They are going to get a lot of synergies out of their acquisition of the Brick. They may spin out their real estate.

(A Top Pick Aug 29/13. Up 22%.) A well-run organization. Furniture business is a tough business, but they are very good at it. They own a lot of the property that the Leon’s stores sit on. If you look at the value of those assets conservatively, it is somewhere between $8 and $10. There is not a huge amount of competition.

Stock is trading right at technical resistance. Has some decent upside potential, probably to the $16-$18 range. Not particularly cheap in a historical point of view, nor is it expensive.

(A Top Pick May 30/13. Up 16.67%.) Great Canadian franchise that continues to grow its business. The purchase of the Brick was an astute one. Also they own a lot of the property that their stores sit on.

(A Top Pick April 1/13. Up 19.39%.) Has always liked this operator. They bought out the Brick, which effectively doubled their revenue. Has good growth out West. Cheap relative to its sector.

(A Top Pick March 28/13. Up 28.48%.) Thinks it is going to continue to do well. Great franchise and great brand-name in Canada. Owns a lot of their own property. It has probably $4-$6 of value in their property.

(Top Pick Feb 28/13, Up 30.72%) Acquired The Brick for a larger presence in Western Canada. Own a lot of the properties, whose value accounts for the full price of the stock, and it is like you get the business for free.

(A Top Pick Jan 21/13. Up 9.07%.) Taking over the Brick was a transformation acquisition. Allows them to become bigger for low cost. Earnings are going to grow from $.80 to $1.20. Trades at 15X earnings and the earnings are going to go up. This does not include the synergies that are going to come with the amalgamation. 70% is owned by the Leon’s family that has been in the business for 100 years. A conservative balance sheet. Also, owns all the property under the stores that they own. Very cheap. Probably worth 20%-30% over the next year or 2.

Great brand in Canada. Just bought the Brick a little while ago. Thinks there is a lot of opportunities for some synergies and cost savings that are going to go through with the Brick. Great dividend yield. A lot of the properties they are on, they own, so doing a conservative valuation of the properties, it is probably $6-$8 in value. Yield of 2.81%.

Missed their numbers a little so stock has not performed very well in the last little while. Trades at about 12X earnings with a reasonable yield of 2.95%. Their acquisition of Brick will show benefits over the next couple of years. Of their share price, $6 of it is their property, which is very, very cheap. There is not that many US companies that will compete with them. Cars have done reasonably well over the last little while so when that slows down, the furniture business will start to do well.