LPX - The Best Value Stock To Buy Today

If you've ever been able to join us on Money Morning LIVE - and I really hope you have - you know we run and track a free model portfolio for our viewers. In this industry, people can and do pay thousands to access research picks like this, but we think free is better.

We haven't sacrificed a shred of performance, though. I just added what I think is going to be an outstanding performer to the portfolio - a true value stock, naturally.

And I recommended an easy-to-make trade that pretty much anyone can execute to line their pockets with even more cash while baking in an even deeper discount on the shares.

I want to make sure everyone gets this pick, though, so I'll give you the ticker and trade here...

person using MacBook Pro on table

Image Source: Unsplash

This Company Ticks All The Boxes

I'm talking about Louisiana-Pacific Corp. (NYSE: LPX). This stock is comfortably in the nexus, you might say, of several trends playing out across the country right now.

These folks sell building materials, in the middle of a blistering real estate boom that has just seen U.S. new home sales top six-month highs.

But... at the same time, lumber - it's not exciting, but it's important to this story - has been on a hair-raising ride, as anyone who's tried to build a house or even just redo their deck recently will tell you.

Lumber prices had rocketed something like 300% between the onset of the coronavirus pandemic and the spring of 2021 when prices hit a high above $1,500 per thousand-board feet. Oriented strand board, or "OSB," which is a kind of wood product not unlike particle board used almost universally in home construction, soared 500% over the same time frame.

But then, by this past September, the "Wood Bubble" had popped, and lumber and wood products gave up pretty much every last nickel of the price gains they'd seen since the pandemic started.

That, and the global raw materials shortages, might've spelled trouble for a company like Louisiana-Pacific, but the company managed to rise above that whole mess to destroy analysts' third-quarter estimates on the top and bottom line.

Check out some of the juicier tidbits from Louisiana-Pacific's most recent earnings call...

Strong Performance In An Inflationary Environment

We saw a 15.9% upside surprise on earnings per share... $522 million in earnings before interest, taxes, depreciation, and amortization (EBITDA)... net sales of $1.22 billion, up 55% from Q3 2020. It is siding, OSB, and elevated work platform segments all grew by high double-digits in the third quarter; demand is strong.

Its cash position is dynamite for a company in this business, with something like $607 million in cash ($511 million from operations alone), and the company slashed its already low debt to $346 million.

Now, at $67, Louisiana-Pacific might not feel cheap, but that price represents a double-digit discount over where the stock should be right now.

The stock is even cheaper relative to its sector-mates in the S&P 500 Basic Materials sector - LPX price/earnings ratio is under 4.75 right now, around 75% lower than other Basic Materials stocks. It's a deal too good to pass up.

But there's a kicker, as well, to sweeten that deal. I recommended writing a cash-secured put on these LPX shares to try and get them even cheaper...

Disclaimer: Riki nema disclaimer.

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