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How much a stock's price changes over time is important for most investors, since price performance can both impact your investment portfolio and help you compare investment results across sectors and industries.
FOMO, or the fear of missing out, also plays a role in investing, particularly with tech giants and popular consumer-facing stocks.
What if you'd invested in Louisiana-Pacific (LPX) ten years ago? It may not have been easy to hold on to LPX for all that time, but if you did, how much would your investment be worth today?
Louisiana-Pacific's Business In-Depth
With that in mind, let's take a look at Louisiana-Pacific's main business drivers.
Louisiana-Pacific Corporation is a leading manufacturer of sustainable, quality engineered wood building materials, structural framing products as well as exterior siding for use in residential, industrial and light commercial construction. Currently, the company operates 20 moderns, strategically located facilities in the United States and Canada, two facilities in Chile and one facility in Brazil. It also operates facilities through a joint venture. The company’s products are used primarily in new home construction, repair as well as remodeling and outdoor structures.
The company has four reportable segments — Siding (contributing 34.4% of 2020 net sales), Oriented Strand Board or OSB (43.8%), Engineered Wood Products or EWP (14%) and South America (6.1%). Notably, revenues from Other sources and Inter-segment sales accounted for 1.8% of its total net sales.
Siding segment consists of LP SmartSide trim and siding, as well as LP Outdoor Building Solutions innovative products for premium outdoor buildings.
OSB segment manufactures and distributes OSB structural panel products including LP OSB, LP TechShield radiant barrier, LP TopNotch sub-flooring, LP Legacy super tough, moisture-resistant sub-flooring, LP WeatherLogic air & water barrier and LP FlameBlock fire-rated sheathing.
EWP segment comprises LP SolidStart I-Joist (IJ), Laminated Veneer Lumber (LVL) and Laminated Strand Lumber (LSL) and other related products.
South America segment manufactures and distributes OSB and siding products in South America and certain export markets.South America segment manufactures and distributes OSB and siding products in South America and certain export markets.
Anyone can invest, but building a successful investment portfolio requires research, patience, and a little bit of risk. So, if you had invested in Louisiana-Pacific ten years ago, you're likely feeling pretty good about your investment today.
According to our calculations, a $1000 investment made in March 2011 would be worth $5,021.91, or a 402.19% gain, as of March 25, 2021. Investors should keep in mind that this return excludes dividends but includes price appreciation.
Compare this to the S&P 500's rally of 196.96% and gold's return of 16.59% over the same time frame.
Analysts are anticipating more upside for LPX.
Louisiana-Pacific's fourth-quarter 2020 earnings and revenues beat analysts’ expectations by 9.2% and 8.9%, respectively, and also improved significantly year over year. Gross margin expanded to 40.8% from 13% in the quarter. SG&A expenses, as a percentage of sales, improved 450 bps year over year, given operating efficiencies achieved throughout its network. In 2020, the company’s net revenues and adjusted EBITDA grew 20.7% and 273.7%, respectively, on a year-over-year basis. Solid repair and remodeling activities, and ample liquidity have been benefiting the company to tide over the pandemic. Moreover, strong SmartSide strand performance, increase in OSB pricing, favorable resin costs, operational efficiency, cost-containment efforts and resilient housing market prospects will likely drive growth.
Shares have gained 5.53% over the past four weeks and there have been 4 higher earnings estimate revisions for fiscal 2021 compared to none lower. The consensus estimate has moved up as well.
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