LikeFolio Begins Coverage on DIN and LZB – What You Need to Know About Both Stocks

By TradeSmith Research Team

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When our friends at LikeFolio initiate coverage on companies outside of the ones requested by hedge funds and institutions, they look for consumer-facing companies that may not receive a lot of attention… which is a good thing.

If everyone is hearing about the same stocks over and over, it doesn’t provide you with a competitive investing edge, and LikeFolio’s Vice President of Research Megan Brantley said that “we love exposing users to new names that may be poised for major growth.”

In February, LikeFolio began covering 13 new companies, and while we can’t go over each and every one, there are two in particular that we want to share: Dine Brands Global (INC) and La-Z-Boy Inc. (LZB).

The Federal Reserve wants to make it seem like it has inflation under control, but if it asked real people how much they are still paying for things at the grocery store, the Fed would know it isn’t winning the battle.

On Feb. 21, LikeFolio shared that mentions about food price concerns had skyrocketed 97%.

But people still have to eat, and on top of that, they still want to socialize, and Dine Brands Global sits at the intersection of eating and socializing with its brands, which include Applebee’s and IHOP.

LikeFolio found that as of March 2, the volume of mentions of Applebee’s and IHOP was up 5% year-over-year (YoY), slightly outperforming Chili’s and Olive Garden.

And while Dine Brands Global CEO John Peyton said that overall foot traffic was flat in 2022, he also noted that Applebee’s and IHOP have been resilient to increased food inflation because they have cemented reputations around providing “good food, generous portions, and a great environment at a great price.”

He also noted that while he wants people to keep nostalgic connections, like childhood memories of getting pancakes at IHOP with grandparents, it’s also important to stay relevant and be innovative.

As part of this push, Dine Brands has renovated 75% of its restaurants and added new items to the menus to keep them fresh and current.

In addition to Applebee’s and IHOP, Dine Global Brands acquired Fuzzy’s Taco Shop in December 2022, a fast-casual Mexican restaurant featuring burrito bowls, tacos, nachos, and margaritas.

Peyton says his company’s goal is to take Fuzzy’s from 140 restaurants and turn it into a national brand.

For our dividend-seeking readers, DIN offers one with a yield of 2.77% as of this writing.

Next up is La-Z-Boy.

Much more than just the brand of recliner your uncle would fall asleep in after Thanksgiving dinner, La-Z-Boy offers everything from loveseats and sectionals to home accents and kitchen and dining furniture.

The company is meshing its reputation for comfort with more upscale offerings, like a dining table made of solid New Zealand pinewood.

Because furniture is still very much something that people want to touch and feel before they buy it, the company has 346 stand-alone La-Z-Boy Furniture Galleries customers can visit to not only imagine how something may look in their home but also take it for a “test drive.”

Revenue and earnings were higher in the company’s last earnings report, and looking ahead to what’s next, La-Z-Boy believes the order backlog for its current quarter will return to pre-pandemic levels.

It’s also worth noting that over the past five years, La-Z-Boy has made some shareholder-friendly moves, paying out $121 million in dividends and repurchasing $217 million in shares.

LZB’s dividend yield as of this writing is 2.33%.