SmartSide products are Louisiana-Pacific’s line of treated, engineered wood siding, textured to simulate natural wood. Engineered wood siding is made of medium density oriented strand board (OSB). Medium density OSB is created by applying waterproof adhesives to rectangular wood strands arranged in cross-sectioned layers. In layman’s terms, OSB is plywood 2.0. Products like SmartSide are increasingly becoming important because OSB has all but replaced plywood for many cost-conscious homebuilders. SmartSide products are less expensive, maintenance free, easy to install, environmentally friendly and are a durable alternative to expensive hard wood siding. SmartSide products are also very popular — even Bob Vila uses SmartSide products.
Brands, we got brands!
Universal Forest Products, Inc. (NASDAQ:UFPI) is a smaller fish in this pond, but it has truly branded its products better than anyone in this space. With over 20 quality and distinctive brands, Universal Forest Products, Inc. (NASDAQ:UFPI) has focused on creating innovative and attractive wood products. Great hardwood decking, decorative railings, specialty products for raised garden beds, and just about everything in between. What Universal Forest Products lacks in market cap it makes up for in quantity and quality.
Louisiana-Pacific’s stock has been weak of late, but it has in reality the only innovation in this space. It’s only a mater of time before this stock price reflects this company’s innovative bent. Weyerhaeuser has a good organic product, Weyerhaeuser Green Studs, but Louisiana-Pacific Corporation has been more innovative in the green-organic lumber space. Weyerhaeuser’s deal is no doubt a counter to Universal Forest Products and Louisiana-Pacific Corporation’s recent activity and product innovation. It’s like Lakers vs. Celtics vs. Pistons in the 80s — only with timber.
Got wood?
With homebuilding stocks delivering solid returns, many want to capitalize and are focusing on lumber products. You don’t have to be Steven Hawking to know lumber and the housing market are inexplicably tied. Universal Forest Products and Louisiana-Pacific Corporation are great companies poised to do well. Longview Timber is a fabulous pickup by Weyerhaeuser — you may want to keep tabs on this company. Right now, Weyerhauser is a weaker stock, but it currently has low volatility. This deal will certainly help, they are just not that many 640,000-acre old-growth forests in North America anymore. Yes, Weyerhaeuser’s competitors have been very aggressive with key partnerships and surprisingly innovative green products. But this $2.65 billion deal assures that Weyerhauser will be standing tall when the dust settles.
The article Weyerhaeuser’s $2.65 Billion Forest originally appeared on Fool.com.
John Moore has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. John is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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