What Happened?

A number of stocks jumped in the afternoon session after the White House announced a one-year delay on planned tariff hikes for many home goods, including furniture and cabinets. 

The decision kept the current 25% tariff rate in place, averting a scheduled increase to as high as 50% for items like kitchen cabinets and bathroom vanities that was set to take effect on New Year's Day. This move provided significant relief for retailers, as higher tariffs typically lead to increased costs. Companies would have faced the difficult choice of absorbing the extra expense, which hurts profitability, or passing it on to customers through higher prices, which could reduce sales. The news was met with investor optimism, sparking a rally in the sector.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Specialty Retail company Leslie's (NASDAQ: LESL) jumped 11.5%. Is now the time to buy Leslie's? Access our full analysis report here, it’s free for active Edge members.
• Sports & Outdoor Equipment Retailer company Dick's (NYSE: DKS) jumped 6.7%. Is now the time to buy Dick's? Access our full analysis report here, it’s free for active Edge members.
• Home Improvement Retailer company Floor And Decor (NYSE: FND) jumped 4.1%. Is now the time to buy Floor And Decor? Access our full analysis report here, it’s free for active Edge members.
• Home Furniture Retailer company RH (NYSE: RH) jumped 5.3%. Is now the time to buy RH? Access our full analysis report here, it’s free for active Edge members.
• Apparel Retailer company Victoria's Secret (NYSE: VSCO) jumped 3%. Is now the time to buy Victoria's Secret? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Leslie's (LESL)

Leslie’s shares are extremely volatile and have had 91 moves greater than 5% over the last year. But moves this big are rare even for Leslie's and indicate this news significantly impacted the market’s perception of the business.

The previous big move we wrote about was 25 days ago when the stock dropped 2.7% on the news that Morgan Stanley significantly lowered its price target on the stock to $3.50 from $7. 

The investment bank, however, maintained its "Equalweight" rating on the shares. This substantial cut in the price expectation suggests a more cautious outlook on the company's future stock performance. Such a large reduction in a price target from a major financial firm often leads investors to reassess their own expectations, contributing to selling pressure on the stock.

Leslie's is up 13.6% since the beginning of the year, but at $1.97 per share, it is still trading 95.7% below its 52-week high of $45.80 from January 2025. Investors who bought $1,000 worth of Leslie’s shares 5 years ago would now be looking at an investment worth $3.74.

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