Leon's Furniture Ltd

I would like to talk about this stock (TSX-LNF) today, as the 2009 annual report is in and I own this stock. This stock is a currently favorite and my intentions are to buy more in the future. I first bought this stock in 2006 and I bought more in 2008 and 2009. I have a return of 8.7% per year on this stock. My return includes all dividends. This stock pays special dividends when it can.

The growth figures on this stock go from not bad to good. In the not bad category are such things as revenue, which has grown over the last 5 and 10 years at 5.4 and 6.6% per year, respectively. The growth in revenue per share is a bit better, with the last 5 and 10 year growth at 6% and 8% per year.

Good growth is found in the cash flow, and over the last 5 and 10 years, the growth has been 9.3% and 9.8% per year. The best growth has been in dividends and they have grown over the past 5 and 10 years at the rate of 8.6% and 12.7% per year, respectively. What you want is for dividends to grow faster than inflation. Inflation has been quite low recently. (The average long term background inflation is about 3% per year.)

If you read any analysts on this stock, the one thing they all seem to mention is the fact that this company has no debt. The Liquidity Ratio is very high at 2.34 currently, with a long term average around 2.00. The Asset/Liability Ratio is even higher at 3.44 and a long term average around 3.30. The ratios are very good. The Return on Equity at 15.2% for 2009 is not bad, considering they did not have a particularly good year. The 5 year running average is even better at 17.6%.

As I said earlier, I plan on buying more of this stock. However, I usually do my buying towards the end of the year as there is usually a seasonality to the market and it is usually at its lowest in the fall.

This company sells home furnishings, appliances and electronics through a chain of retail facilities and franchises located in Canada. Leon family owns 68% of this company. Cannot find financial statements on site, but they are published in news item. Its web site is www.leons.ca . See my spreadsheet at www.spbrunner.com/stocks/lnf.htm .

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.