Louisiana-Pacific Corporation is a Nashville-based manufacturer of building materials. It is well-known for its lumber products and is the pioneer in oriented strand board (OSB) panel production. In fact, it is the world’s largest producer of OSB. Home building activity is closely linked with the overall health of the economy. Though near-term headwinds in this sector persist, the longer-term outlook is that of an uptrend. Interest rates are also extremely low and homebuilding is expected to pick up once the pandemic subsides.
A look at the long-term monthly chart for LPX shows a steady uptrend that began in late 2011. This uptrend faced resistance in 2018 and then in 2020. In February and March 2020, the stock fell 45% and went below the long-term trend channel. However, in April and May 2020, the stock has recovered and has bounced back 44%. LPX recently crossed an important area of value formed by a historic support-resistance area as well as the bottom of the long-term trend. The likely next target is the resistance zone at around 30. Stop loss can be placed around the 20-21 level.
Positions taken today at $24.78 with a stop loss at $20 19.28% below. Short term profits can be taken at $35 giving a profit of 41%.