Buy the Dip: 1 Stock Down 22% That’s a Smart Buy Today

Leon’s Furniture (TSX:LNF) looks like a huge bargain this March.

If you’re ready to consider forming a shopping list after the stock market’s latest spill, you’re on the right track. Of course, it’s impossible to time the exact bottom. But as a new investor, you shouldn’t seek to find the bottom, as doing so may cause you to miss out on the opportunity to snag shares at some percentage discount to its intrinsic value. Indeed, sometimes, investors should pick up a few shares with the expectation that more pain will be ahead. And instead of feeling down about buying right before another leg lower, one should be thrilled at the opportunity to buy even more shares at lower prices.

No doubt, it’s counterintuitive to view stock dips as a good thing. In prior pieces, I’ve advocated for such a viewpoint, especially for new investors who are still early on in their investing journeys.

Indeed, it takes a while for new investors to view a stock market sell-off as a good thing — akin to a “sale” on one’s favourite stocks.

Either way, if you’ve got plenty of cash handy and haven’t yet bought anything after the latest Spring-time swoon, perhaps it’s time to formulate a list on names you’d be willing to pick up. Of course, the amplified hit to the chin may accompany a sharper rebound when the time comes (probably when Trump completely backs away from tariffs). However, if we are to experience another 10% drop from these depths, the following names may not be spared.

As such, it’s vital to be ready to keep buying on the way down to take the “timing” aspect out of the equation entirely. While dollar-cost averaging (DCA) isn’t for everyone, new investors who leverage such an approach can keep their cool far better than those who plow a lump sum into a stock at a specific price. At the very least, the following name is worth adding to a watchlist as we head into further turbulence at the hands of more tariff headlines.

Retirees sip their morning coffee outside.

Source: Getty Images

Leon’s Furniture

Leon’s Furniture (TSX: LNF) stock is getting way too cheap to ignore after plunging to $23 and change per share, down just shy of 22% from all-time highs hit just a few months ago. Indeed, if tariff threats and recession worries are on the table, many prospective buyers of big-ticket items may be inclined to put off their spending.

Indeed, furniture and home goods aren’t a must, especially at a time like this. Though Leon’s is one of the best-run furniture retailers in the country, I do think that, in due time, it will be ready to pick up where it left off once Canadian consumers feel a bit better about their economic prospects. Think of recent macro headwinds as pushing demand into the future by some quarters or years.

Either way, the “buy Canadian” mentality may work in Leon’s favour over the next few years. And if it does, perhaps the Canadian furnishing retailer could have an upper hand over its non-domestic rivals.

With a nice 3.4% dividend yield and a 10.5 times trailing price-to-earnings (P/E) multiple, shares of LNF look like a deep-value bargain for those willing to ride out the rough patch that could carry into year’s end. Given the potential for volatility, I’d argue that the name is a prime candidate for averaging into over time.

Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool recommends Leon's Furniture. The Motley Fool has a disclosure policy. 

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