The residential and commercial construction markets still have a long way to go before they can be called "healthy", but Universal Forest Products (UFPI)
is already well ahead of the curve. With strong unit growth and
improved margins in the third quarter, growing expectations, and strong
margin leverage to a construction recovery, I can understand the
enthusiasm for this wood products company.
Although I understand,
I'm not looking to join in with my own cash. Trying to forecast the pace
and magnitude of residential and commercial construction recoveries is
just asking to be wrong, and I won't argue with more momentum-oriented
investors who look at this as a directional play on construction
activity. I try to invest with a margin of safety whenever possible,
though, and I think a stock like Louisiana-Pacific (LPX) may offer a little more of that right now.
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A Remodeling Recovery Has Sent Universal Forest To Multi-Year Highs
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