We recently published a list of Growth Stock Portfolio: 12 Stock Picks By Warren Buffett. In this article, we are going to take a look at where Louisiana-Pacific Corporation (NYSE:LPX) stands against other growth stock picks by Warren Buffett.
Warren Buffett’s Berkshire Hathaway portfolio has long been a beacon for value investors looking for high-quality businesses with long-term competitive advantages. Since taking over as CEO of Berkshire six decades ago, the appropriately named “Oracle of Omaha” has outperformed the broader market.
As we approach 2025, some of Berkshire’s assets stand out as promising opportunities, combining excellent fundamentals with acceptable values despite the market’s sustained emphasis on technology and growth stocks.
Berkshire’s CEO is a strong believer in portfolio concentration. Buffett’s investment strategy revolves around choosing companies with significant competitive advantages, effective management teams, and the potential to create regular free cash flow. His concept focuses on buying exceptional firms at acceptable costs rather than inferior enterprises at low rates. This strategy has proven successful across numerous market cycles, with Berkshire Hathaway providing compound yearly returns significantly higher than market averages over several decades.
The “Oracle of Omaha” concentrates on companies he understands, avoiding complex technologies or models with uncertain earnings potential. He looks for companies with pricing power, great brand awareness, and the ability to preserve or grow market share even during economic downturns. Buffett’s conservative yet effective approach has helped him become one of history’s most successful investors.
Following the filing of Berkshire’s 13F on February 14, we now know that 60% ($180 billion) of Buffett’s $299 billion portfolio is concentrated in just four magnificent stocks.
Japanese stock investors are attentively watching Buffett’s letter in the hopes of gaining information that may affect the country’s trading houses. Buffett has previously approved Japanese trading companies, resulting in increased stock value. Market participants will examine his comments for clues about the future of these companies, particularly as they are impacted by decreasing energy prices and pressure from the US government to reduce oil expenses.
As usual, Buffett’s shareholder letter is expected to provide significant insights not only into Berkshire Hathaway’s performance but also into market trends.
A construction worker standing on a rooftop with a toolbelt in hand, looking out at a new home development in the background.
Methodology
For this article, we scanned Warren Buffett’s Q4 2024 portfolio. We then chose 12 stocks with the highest 5-year average revenue growth (YoY) and ranked accordingly.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Louisiana-Pacific Corporation (NYSE:LPX)
5-year average revenue growth (YoY): 10.91%
Warren Buffett’s Growth Stock Portfolio includes Louisiana-Pacific Corporation’s (NYSE:LPX). It produces engineered wood siding for use in home building, repair, and remodeling projects in addition to its primary product, oriented strand boards. Although the company has built capacity in Brazil and Chile, it is primarily exposed to the housing industry in North America.
Louisiana-Pacific Corporation (NYSE:LPX) reported a 1% drop in net sales for the third quarter of 2024 as a result of shifting market conditions. On the other hand, siding revenue increased by $76 million, or 22%, due to a 15% increase in volume and a 6% increase in prices. The business is dedicated to adjusting and exhibiting resilience in the face of market constraints.
During the quarter, Louisiana-Pacific Corporation (NYSE:LPX) produced $184 million in operational cash flow and $153 million in EBITDA. During the third quarter, the company returned $91 million to shareholders through dividends and share repurchases while strategically investing $44 million in capital expenditures. Louisiana-Pacific Corporation (NYSE:LPX) had a healthy balance sheet and around $900 million in liquidity as of September 30, 2024. LPX is an attractive investment opportunity in the land and timber industry because of the company’s focus on providing value to shareholders while making strategic investments in expansion plans.
Overall, LPX ranks 9th on our list of Growth Stock Portfolio: 12 Stock Picks By Warren Buffett. While we acknowledge the potential for LPX to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than LPX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
