Universal Forest Products, Inc. (UFPI), an active player in the lumber supply chain, announced the acquisition of certain assets of High Level Components, LLC for an undisclosed amount. The transaction seems to have impressed the investors as evidenced by a nearly 2.04% gain in the company’s share price on Apr 2, 2014.
The acquired assets of the Locust, NC-based building component manufacturer will be integrated with Universal Forest Products Inc.’s Mid-Atlantic subsidiary. The latter is also a component manufacturer and has operations in South Carolina, Virginia, Georgia and North Carolina.
High Level Components’ expertise in manufacturing building components will power Universal Forest Products to expand its customer base in the Charlotte, NC, market by offering varied products and services.
This transaction was Universal Forest Products’ second acquisition in the last three days. Prior to this, the company had acquired a 50% stake in Upshur Forest Products, LLC. The acquisition will enable the company to expand its customer base in East Texas and western Louisiana. Roughly $10 million in revenues are anticipated by 2015.
Over the long term, we believe Universal Forest Products will gain from accretive acquisitions and addition of new customers and products to its portfolio. The company aims to generate $3 billion in revenues with operating margins at normal historical levels by 2017. Earnings are anticipated to grow by 10.0% in the next 5 years.
Universal Forest Products currently has a market capitalization of $1.14 billion and carries a Zacks Rank #1 (Strong Buy). Stocks to watch out for in the sector are Stock Building Supply Holdings, Inc. (STCK), CaesarStone Sdot-Yam Ltd. (CSTE) and United Rentals, Inc. (URI). While Stock Building Supply Holdings and CaesarStone Sdot-Yam carry the same rank as Universal Forest Products, United Rentals holds a Zacks Rank #2 (Buy).