Louisiana-Pacific Boosted By A Buyback And May Be Past The Worst

Cyclical commodity companies are never easy to model or analyze, and Louisiana-Pacific (LPX) (or “LP”) is really no exception. Oriented strand board (or OSB) prices have stabilized recently, but at much lower levels than a year ago, but competition seems to ramping up in specialty siding and you can never really be too confident that the company’s smaller rivals will remain disciplined on pricing and capex. On top of all that, you have the uncertainties that go with modeling the residential construction market.

LP has done pretty well since my last write-up, rising more than 15% and outperforming not only the S&P 500, but also competitors like Weyerhaeuser (WY) and Norbord (OSB), with investors liking what they heard in mid-February regarding an accelerated buyback plan. At this point, I no longer see LP as undervalued and further upside seems tied much more to the health of the residential construction market.

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Louisiana-Pacific Boosted By A Buyback And May Be Past The Worst