Lumber Liquidators Inc.  (LL) Trade Now »     Rate LL  -  Discuss LL  -  Add to Watch List        

In recent months<!----> we have seen soaring fuel and food prices, declining home prices and home equity, a fairly high increase in the unemployment rate and an economy which has slowed considerably from its levels just a few months earlier. Yet at the same time, we are seeing the consumer holding up better than many folks had anticipated. So where are people spending money?

When a firm downgrades a stock after being one of the lead underwriters of the offering, you’re looking at about as clear a sell signal as you can find. That is what happened to Lumber Liquidators (LL) when Goldman Sachs downgraded the hardwood flooring retailer from a buy to a hold, saying that, after the stock’s recent run, LL’s share “trade at one of the highest multiples in [our] coverage universe.”

The Company and Business:

Lumber Liquidators (LL) was started in 1993 with a decision by founder Tom Sullivan to sell lumber at reduced prices out of a warehouse.<!----> From those humble beginnings, Tom was able to build an inventory of very high-quality wood which could be used in hardwood and other flooring, and the first store was opened three years later. The company's roots started in Massachusetts but the company decided to move its headquarters to Virginia in order to have a much larger warehouse for the hardwood flooring.