As the market collapses, building products leader Louisiana-Pacific shows rising relative strength and looks to shore up a recent breakout. Industry peer Boise Cascade joins LPX stock on the IBD Breakout Stocks Index.
Since the end of last year, sharp declines and volatility in the indexes have caused rally attempts in the market to quickly splinter and snap. Such roller-coaster markets often produce double-bottom chart patterns, and that was the case for LPX stock.
Now Louisiana-Pacific, featured as the IBD Stock Of The Day on May 5, is trying to rebound and retake its initial entry.
See Who Joins LPX Stock On The IBD Breakout Stocks Index
Louisiana-Pacific Rebuilds Accelerating Growth
Based in Nashville, Tenn., Louisiana-Pacific makes high-performance building materials and solutions for builders, remodelers and homeowners worldwide. In February, the company rebranded as LP Building Solutions to reflect its strategy to be the industry's leading source for building products.
Its extensive offerings include innovative products such as LP SmartSide Trim & Siding, LP Outdoor Building Solutions and LP TopNotch Sub-Flooring.
Founded in 1972, Louisiana-Pacific operates 25 plants across the U.S., Canada, Chile and Brazil.
The wood building products industry group is ranked No. 43 among the 197 groups IBD tracks. Boise Cascade tops the group with a 98 Composite Rating, just ahead of LPX stock, which earns a 96.
After decelerating following several quarters of massive earnings growth, Louisiana Pacific once again posted accelerating EPS gains last quarter, with a jump from 11% in Q4 of 2021 to 69% in Q1. Sales growth also rose from 15% in Q4 to a 31% for the first quarter of 2022.
Boise Cascade has constructed triple-digit EPS gains in each of the last two quarters. Revenue growth has risen from 18% to 21% to 28% over the last three quarters.
LPX Stock Tries To Fortify Buy Point As Market Corrects
Like its siding products weathering a storm, Louisiana-Pacific has held up better than most as the market correction batters the stock market indexes. In a clear sign of resilience, the relative strength line for LPX stock remains at a new high.
But no stock is immune to a sharp market sell-off, and Louisiana-Pacific has pulled back after breaking out past a 74.67 buy point in a double bottom on May 4 after reporting earnings.
Volume in the lead-up to and on the breakout was strong, but trade in the pullback has also been above average. Look for volume to increase if LPX stock retakes the earlier entry.
Also keep an eye on the 50-day and 200-day moving averages. Louisiana-Pacific is at a crossroads as the two benchmark lines have melded into one on the stock chart. See if the shorter-term 50-day line can move clearly above the longer-term 200-day benchmark to show improving technical strength.
Meanwhile, Boise Cascade has also pulled back from a new high it hit on May 5 just before earnings. It tried to rally on May 9, but has since reversed to test support at its 50-day line.
IBD Breakout Opportunities ETF
The IBD Breakout Opportunities ETF from Innovator Capital Management tracks the IBD Breakout Stocks Index. As with other index ETFs, this fund allows you to essentially invest in the entire index in addition to or rather than buying the individual stocks. Learn more here about the ETF and Innovator funds.
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
