Several sawmills were closed amid the COVID-19 pandemic as lockdown mandates and travel restrictions caused a labor shortage. The low supply and rising demand from the booming housing market have been driving rising lumber prices. Along with demand for the construction of new homes, home-renovation trends amid the pandemic have contributed to the increase in demand for lumber. Lumber prices have tripled over the past year and are expected to keep rising…
According to the National Association of Home Builders (NAHB), the surge in lumber prices in the past year has added $35,872 to the price of an average new single-family home and $12,966 to the market value of an average new multi-family home. And because interest rates are expected to remain low for the foreseeable future, rising housing activities should continue to drive-up lumber prices.
Given this backdrop, we think it is wise to bet on Louisiana-Pacific Corporation (LPX – Get Rating), PotlatchDeltic Corporation (PCH – Get Rating), and Masonite International Corporation (DOOR – Get Rating) because they are likely to benefit from the rise in lumber prices.
Louisiana-Pacific Corporation (LPX – Get Rating)
LPX is a manufacturer of building products. The company’s products are used in home construction, repair and remodeling, and outdoor structures. It operates through four segments—North America Oriented Strand Board (OSB), Siding, Engineered Wood Products (EWP) and South America.
LPX’s $1.02 billion in net sales for its fiscal year 2021 first quarter, ended March 31,represents a 73.9% year-over-year rise. Its gross profit has increased 343.5% year-over-year to $479 million and its operating earnings have increased 879.5% year-over-year to $431 million. The company’s net earnings increased 869.7% year-over-year to $320 million. Also, its adjusted EPS came in at $3.01 for the quarter, which represents a 785.3% year-over-year increase.
Analysts expect its EPS to be $4.06 for the current quarter, ending June 30, 2021, which represents an 844.2% year-over-year rise. Its revenue is expected to increase 118.4% year-over-year to $1.16 billion in the current quarter. LPX surpassed consensus EPS estimates in all four trailing quarters.
The company’s board of directors declared a $0.16 cash dividend per share for common shareholders, payable on June 1. This reflects the company’s fundamental strength. The stock has gained 263.5% over the past year to close Friday’s trading session at $72.73.
It’s no surprise that LPX has an overall B rating, which equates to Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has an A grade for Quality, and a B grade for Momentum and Growth. Click here to see LPX’s ratings for Value, Sentiment and Stability as well.
LPX is ranked #26 of 54 stocks in the A-rated Industrial-Building Materials industry.
PotlatchDeltic Corporation (PCH – Get Rating)
Real estate investment trust (REIT) PCH is primarily engaged in activities associated with timberland management, including the sale of timber, management of timberlands, and purchase and sale of timberlands. The company is also engaged in the manufacture and sale of wood products. It operates through three segments— Resource, Wood Products and Real Estate.
For its fiscal year 2021 first quarter, ended March 31, PCH’s net sales increased 69.6% year-over-year to $354.20 million. Its adjusted EBITDA came in at $195 million, up 309.7% year-over-year. The company’s net income increased 880.4% year-over-year to $131.10 million. Also, its EPS came in at $1.94, which represents an 781.8% year-over-year rise.
Analysts expect the company’s EPS and revenue to…
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