1. Louisiana-Pacific Corporation (NYSE:LPX)
Number of Hedge Fund Holders: 48
Louisiana-Pacific Corporation (NYSE:LPX) is a leading supplier of building solutions across various markets. The company’s products cater to new home construction, repair and remodel projects, and even outdoor structures.
Louisiana-Pacific Corporation (NYSE: LPX) reported strong financial results for the first quarter of 2024, surpassing its performance from the same period in 2023. Net sales increased by 24% to $724 million, driven by strong growth in both the Siding segment (up 9% to $361 million) and the Oriented Strand Board (OSB) segment (up 65% to $313 million).
Profitability also saw a significant boost, with net profit margin rising by over 300% YoY. The company’s net income increased by $85 million, reaching $108 million. This translates to a year-on-year rise of $1.19 per diluted share, bringing net income per share to $1.48. The company’s cash flow from operations also improved dramatically, increasing by $223 million to $105 million in Q1 2024.
Analysts are optimistic about Louisiana-Pacific Corporation’s (NYSE:LPX) future and have given the stock an average 12-month price target of $89.43. This represents a potential upside of 4.55% from the current price levels.
Here’s what Cooper Investors said about Louisiana-Pacific Corporation (NYSE:LPX) in its Q1 2024 investor letter:
“Highlights are often the private site tours we undertake with portfolio companies, two worth discussing on this trip were with Louisiana-Pacific Corporation (NYSE:LPX) and Eurofins Scientific (Eurofins). LP is a business we invested in mid-2023 and represents a Low-Risk Turnaround where the proposition is a commodity-to-specialty transformation story. The company is a leading manufacturer of wood-based building materials produced from its 24 mills and finishing plants, comprising ~4bn sq. ft of Oriented Strand Board (OSB) capacity and ~2bn sq. ft of siding capacity. Historically, OSB was the core output of LP but is a commoditised product in which LP is a price-taker. Group profits and losses swung around and led to highly volatile earnings over the years for a business at the whim of the underlying OSB price.
Siding on the other hand is a genuinely differentiated product that gives LP pricing power and generates consistent incremental margins of 25-30%. Made in the same mills as OSB using engineered wood flake and embossed with a grain finish (a processing marvel we’ve witnessed first-hand at a Source: Company Disclosures, Redburn Atlantic mill in Upper Michigan), LP ‘Smartside’ is a sustainable way to wrap homes in an attractive durable substrate that is gaining popularity among small and medium builders…” (Click here to read the full text)
While we acknowledge the potential of Louisiana-Pacific Corporation (NYSE:LPX) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than Louisiana-Pacific Corporation (NYSE:LPX) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These 10 Stocks in June.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and investors. Please subscribe to our daily free newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
