2. Louisiana-Pacific Corporation (NYSE:LPX)
Number of Hedge Fund Holders: 28
Louisiana-Pacific Corporation (NYSE:LPX) manufactures and markets building products that are used in new home construction, repair, and remodeling. The company is a leading producer of lumber and is one of the best lumber stocks to buy now. Over the past three months, Louisiana-Pacific Corporation (NYSE:LPX) has received 3 Buy ratings and 1 Hold rating from Wall Street analysts and has a consensus Buy rating.
Louisiana-Pacific Corporation (NYSE:LPX) is trading at bargain levels and is presenting an attractive entry point for investors. As of October 7, the stock has a trailing twelve-month PE ratio of 3.45 and is offering a forward dividend yield of 1.60%. Moreover, the company is profitable and has solid free cash flows. Louisiana-Pacific Corporation (NYSE:LPX) has free cash flows of over $1.2 billion and has a trailing twelve-month operating margin of 37.2%.
At the end of the second quarter of 2022, 28 hedge funds were long Louisiana-Pacific Corporation (NYSE:LPX) and held stakes worth $213.3 million in the company. As of June 30, Renaissance Technologies is the most prominent investor in Louisiana-Pacific Corporation (NYSE:LPX) and has stakes worth $40.78 million in the company.
Here is what L1 Capital International had to say about Louisiana-Pacific Corporation (NYSE:LPX) in its second-quarter 2022 investor letter:
“We have invested in Louisiana-Pacific Corporation (NYSE:LPX) due to its Smartside siding business. Smartside has consistently increased its share of the siding market in the U.S., not just new residential construction but repair and renovation, shed and other markets. Louisiana Pacific has not been able to keep up with demand for Smartside and is sold out to the end of 2022. New capacity is being added currently which will support future growth.
Between 2015 to 2022, Smartside EBITDA increased from around US$100 million to a run-rate approaching US$400 million. We believe Smartside has many years of strongly profitable growth to come (see Figure 12).
Imagine being offered to buy a business. This business is breakeven in a down year, makes an operating profit of a few hundred million dollars in a normal year, and in an exceptional period in 2021 made around US$1.5 billion profit. The person offers to sell you the business for nothing. This is the current investment opportunity for Louisiana Pacific. In addition to owning Smartside, it also owns the second largest oriented strand board business in North America and a successful woods product business in South America. The price of OSB is exceptionally volatile, but has recently delivered super-normal profits to Louisiana Pacific, enabling management to buy back 45% of shares on issue while maintaining net cash. At Louisiana Pacific’s current share price, we are paying the bottom end of fair value for Smartside and getting the OSB business practically for nothing.”
