Forget AI, This Cash-Rich Name Is Quietly Outperforming Big Tech
The furniture company has no long-term debt, and sits on a cash position of more than $300 million heading into earnings.
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There’s been a lot of talk about tech and AI this year, and for good reason. The Nasdaq CTA Artificial Intelligence Index (NQINTEL) has gained 37% year-to-date, and 73% over the past year.
Many individual names in the AI sector have outperformed this index. At times, it seems that AI dominates market discussion to the point that other topics are relegated to a secondary status.
The Comforts of Home
You can’t get much further away from the topics of AI and technology than when you talk about furniture. One name that I like in that sector right now is La-Z-Boy Inc. (LZB).
While furniture in general, and La-Z-Boy in particular, might not seem exciting, this stock is making some noise. Over the past month, La-Z-Boy has outperformed Nvidia (NVDA), Tesla (TSLA), Alphabet (GOOGL), Advanced Micro Devices (AMD), and many other large-cap tech companies.
Let’s Go to the Charts
La-Z-Boy climbed 4.3% on Thursday to close at its highest level since January. The stock is up 10% over the past month, and is currently rising within a bull channel (black lines).
La-Z-Boy has formed a series of higher lows (HL) and higher highs (HH), indicating a bullish trend. The stock’s 50-day moving average (blue) is about to cross above its 200-day moving average (red). Both moving averages are rising, signaling a bullish momentum crossover is about to occur (circled).
The only negative on La-Z-Boy’s chart is an area of overhead resistance (shaded blue) in the $40 area.
Solid Fundamentals and Cash Position
La-Z-Boy’s strong technical chart matches its fundamentals. Unlike many big names in AI and tech, La-Z-Boy isn’t going to need a secondary offering to raise cash anytime soon.
The company has no long-term debt, and sits on a cash position of more than $300 million. That might not sound like much, but the company’s market capitalization is just $1.6 billion. Therefore, La-Z-Boy’s cash pile is equivalent to 18.75% of the company’s current market cap.
How We’re Playing It
Since La-Z-Boy is scheduled to report earnings on June 16, we’re entering with a half-sized position. Depending on the quality of the earnings report, and the stock’s reaction, we could add to the position after that date.
Bottom Line
La-Z-Boy isn’t trying to put an AI data center in space. It will never accidentally unleash man-made horrors beyond our comprehension. It’s just a debt-free, cash-rich, non-tech company that makes simple, useful products that consumers can enjoy in their homes.
More From Ed Ponsi:
- 3 Reasons Why Investors Shouldn’t Worry About Apple
- Tech Investors Must Watch This Key Indicator
- Drone Manufacturers Take Flight: Grading 3 Names
At the time of publication, Ponsi was long LZB, NVDA, TSLA and AMD.
