Trade-Ideas: Louisiana-Pacific (LPX) Is Today's

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Louisiana-Pacific ( LPX) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Louisiana-Pacific as such a stock due to the following factors:

  • LPX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $24.6 million.
  • LPX has traded 1.9 million shares today.
  • LPX traded in a range 210.7% of the normal price range with a price range of $0.68.
  • LPX traded above its daily resistance level (quality: 9 days, meaning that the stock is crossing a resistance level set by the last 9 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on LPX:

Louisiana-Pacific Corporation, together with its subsidiaries, manufactures and sells building products for new home construction, repair and remodeling, manufactured housing, and light industrial and commercial construction. LPX has a PE ratio of 350.0. Currently there are 6 analysts that rate Louisiana-Pacific a buy, 2 analysts rate it a sell, and 3 rate it a hold.

The average volume for Louisiana-Pacific has been 2.2 million shares per day over the past 30 days. Louisiana-Pacific has a market cap of $2.0 billion and is part of the services sector and wholesale industry. The stock has a beta of 1.59 and a short float of 9.3% with 9.11 days to cover. Shares are down 26.1% year-to-date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Louisiana-Pacific as a hold. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • The debt-to-equity ratio is somewhat low, currently at 0.63, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with this, the company maintains a quick ratio of 4.42, which clearly demonstrates the ability to cover short-term cash needs.
  • LPX, with its decline in revenue, slightly underperformed the industry average of 2.3%. Since the same quarter one year prior, revenues slightly dropped by 8.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • LOUISIANA-PACIFIC CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, LOUISIANA-PACIFIC CORP increased its bottom line by earning $1.22 versus $0.20 in the prior year. For the next year, the market is expecting a contraction of 109.8% in earnings (-$0.12 versus $1.22).
  • The gross profit margin for LOUISIANA-PACIFIC CORP is currently extremely low, coming in at 10.99%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 0.40% trails that of the industry average.
  • Net operating cash flow has significantly decreased to $15.20 million or 89.64% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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