Louisiana-Pacific May Have A Little More Gas In The Tank, But The Light Is Flashing (NYSE:LPX)

Between surprisingly strong housing activity and an ill-timed supply shutdown, the oriented strand board (or OSB) market is booming, with prices blowing through past peak levels around $450/msf and smashing the old 2004 housing boom pricing records. As the second-largest manufacturer of OSB, that’s good news for Louisiana-Pacific (LPX) shareholders, as the company is going to reap a surge in profits and cash flows.

The downside is that the booms never last. The price spike has been driven in large part by capacity reductions tied to COVID-19 (though some structural/cyclical shutdowns prior to COVID-19 played a role) at a time when building activity has stayed surprisingly strong and renovation/repair work has surged. Producers like Norbord (OSB), LP, Georgia Pacific, and Weyerhaeuser (WY) are scrambling to reactivate capacity to serve this demand, but the high prices won’t last. They never last.

I’m bullish on residential housing through 2021 and capacity additions in the OSB sector have been relatively restrained in recent years. That could leave a little gas in the tank for further share price appreciation, but I think anybody considering the shares ought to have an exit strategy in mind, as a look at a long-term chart will tell you that the cyclical corrections here have been pretty ferocious.

A New High For OSB Prices

OSB prices have been on a tear, rising from around $270/msf in the second quarter to around $650/msf early in September to over $700 more recently. At those late September prices, OSB has topped its former peak prices by around 50%, and that is going to drive sharply higher realizations for LP and other OSB producers, as LP was already back to 90% of available capacity at the end of the second quarter.

The spike hasn’t occurred in a vacuum. Recent house starts have

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Lowe’s, ‘Shark Tank’ star Daymond John launch effort for small businesses

As many small businesses face challenges during the coronavirus pandemic, Lowe’s is giving them a shot to get their products on its store shelves and website.

Lowe’s CEO Marvin Ellison said Tuesday on CNBC’s “Squawk on the Street” that the home improvement retailer is teaming up with Daymond John, a star of ABC’s “Shark Tank,” to mentor entrepreneurs across diverse backgrounds, listen to their pitches and narrow the pool to standouts. The initiative will ultimately culminate in a one-day pitch competition judged by Lowe’s executives and hosted by John.

“Although we’re a big company, we’re fortunate to be classified as an essential business, we understand that the success of our broader macro economy is going to be the small businesses and the ability for small businesses to continue to grow and thrive,” Ellison said. “We understand that Covid-19 has created an incredible strain on the economic viability of many of these small businesses. We are, as a large company, doing our best to help.”

The home improvement retailer has committed $55 million towards small business grants to support minority-owned and women-owned businesses and rural small businesses — many of which have struggled as Covid-19 spread, shuttered stores and created economic uncertainty.

Ellison said Tuesday that the new effort was inspired by the outpouring of interest and great need. He said Lowe’s has gotten over 800,000 applications for the grants since it began the program in May.

“The demand from this program led us to understand that there’s a lot more that we should be doing,” he said. “So we came up with an idea to try to get more products on our shelves and on Lowes.com that originate from diverse entrepreneurs.”

The new initiative is called “Making it… With Lowe’s.” Small businesses can apply for the contest from Sept. 15

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