close icon

LEG Stock Lost 38% in Two Years. Time to Buy?

Less than two years ago, in February 2017, the price of Leggett & Platt shares was hovering above $49 a share. LEG stock was still thought to be in an uptrend, following a steady rally from $10.03 in March 2009.

However, stocks get more risky as they rise, not less. Following a 400% rally in just 8 years, many might have started thinking LEG was a sure bet. Unfortunately, as the great Peter Lynch once wrote, “stocks are most likely to be accepted as prudent at the moment they’re not.

So instead of joining LEG stock bulls above $49 a share, we decided to put our Elliott Wave glasses on. As it turned out, while everyone was still in love with Leggett & Platt, its weekly chart already had “danger” written all over it.
LEG stock Elliott Wave chart
This chart was included in an article called “Leggett & Platt Not Done Falling”, published on February 27th, 2017. It revealed that LEG’s entire rally from $10 to almost $55 had the structure of a textbook five-wave impulse. The five sub-waves of (1) and (3) were also clearly visible. In addition, waves (2) and (4) obeyed the guideline of alternation. Wave (2) was a sideways expanding flat correction, while wave (4) was a sharp zigzag.

LEG Stock Not a Wall Street Favorite Anymore

The reason for our pessimism rooted in the Elliott Wave postulate that a three-wave correction in the opposite direction follows every impulse. Since wave (5) seemed to be over already, we thought a three-wave decline to the support of wave (4) can be expected in LEG stock. The updated chart below shows the suffering Leggett & Platt investors had to go through recently.
LEG stock Elliott wave forecast
Wave (b) led LEG stock to a new all-time high of $54.97 in April 2017, only to make wave (c) even worse. The share price fell to as low as $34.07 last month, which translates into a 38% selloff in just 18 months. Fortunately, Elliott Wave analysis helped us dodge that bullet.

What to expect from now on? Well, the new high in wave (b) means LEG stock is most likely drawing an expanding flat correction. Wave (c), currently in progress, needs to evolve into a complete impulse pattern. Waves 4 and 5 of (c) are still missing so it makes sense to expect more weakness in the mid-term. The support area near the 61.8% Fibonacci level is a reasonable bearish target.

On the other hand, once the stock approaches $30 a share, we should get ready for a bullish reversal. Leggett & Platt is a profitable company, which managed to maintain revenue growth despite all the headwinds in the industry. The current weakness looks like the opportunity long-term investors have been waiting for.

Did you like this analysis? Our Elliott Wave Video Course can teach you how to uncover similar dangers (and opportunities) yourself!



Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

Ford Stock Looks Attractive Near Fibonacci Support

Ford stock holders did not have a lot of reasons to celebrate in recent years. The stock climbed to $18.12 in July 2014, but has been sliding ever since. To make matters worse, 2018 brought a decline from $13.48 in January to as low as $8.17 last month. Ford stock closed at $9.25 yesterday, which…

Read More »

Nordstrom Crashed. Was EPS Miss the Real Reason?

Nordstrom shareholders were enjoying a smooth ride so far in 2018. The stock was up by as much as 38.8% by the end of October, crushing the return of the S&P 500 by a large margin. November, on the other hand, is not that generous. JWN fell from $67.75 to less than $50 a share…

Read More »

3M Stock: Another Elliott Wave Reason for Skepticism

2018 has not been very kind to 3M stock investors. The share price was hovering in the vicinity of $260 in January. Fast-forward to October 26th , it was down to $181.98 for a 30% plunge in just ten months. Now let’s take a look at the 4-hour chart of 3M stock, which we shared…

Read More »

PayPal Stock Entering High-Risk Territory

PayPal Holdings Inc. was spun off from eBay in 2015 and, judging from its share price three years later, it has been a tremendous investment. PayPal stock fell to $30 a share in August 2015. By September 2018, it was trading above the $93 mark. Following last month’s dip to $74.66, the stock is on…

Read More »

MCD Stock is a Bull Trap at New All-Time Highs

Less than two months ago, on September 19th, the stock price of the biggest fast food chain in the world was hovering below $158 a share. MCD stock had spent most of 2018 moving sideways without making any meaningful progress. The good news was that in the meantime it had formed a textbook triangle correction,…

Read More »

AMD Stock Confirms Bearish Reversal

A month and a half ago, on September 11th, AMD stock was hovering around $30 a share following a spectacular 190% rally in 2018. Optimism was running high, but knowing that semiconductors is an extremely cyclical industry, we thought it was time to “be careful”. Of course, the stock did not start declining immediately after…

Read More »

Bank of America Slides Despite Record Quarter

Bank of America reported its Q3 results on Monday. To say that the mega bank’s performance was good would be an understatement. Record net income of $7.2 billion translated into EPS of $0.66, 11% return on equity and 1.23% return on assets. The latter is a pretty solid result for a bank with $2.34 trillion…

Read More »

More analyses