Crista Huff

Stock number one is: 

Louisiana-Pacific Corp., (SYMBOL: LPX) and the headline says: Louisiana-Pacific to buy Ainsworth Lumber for $1 billion -- Reuters

Louisiana-Pacific Corp. shares are up about 10% today, after the company agreed to buy Canadian wood products company Ainsworth Lumber.  The deal is expected to be accretive to earnings and cash flow in the first year.  “Ainsworth has the best margins among peers & gives Louisiana Pacific access to growing Asian markets, especially Japan,” says Deutsche Bank.

After five years of net losses, the company earned a small profit last year.  Current and future  earnings are expected to reflect aggressive growth, giving the stock a low PE of 14.5.

The stock price suffered a big pullback this summer since running up to $22 in March, and appears ready to stabilize. Expect resistance around $17.50 before any meaningful retracement occurs on the upside.

Our Ransom Note trendline says:  STAY ON THE SIDELINES.

LPX Chart

LPX data by YCharts

Stock number two is: 

L Brands Inc., (SYMBOL: LTD) and the headline says: Victoria the Secret Sauce for Solid August Comps – Morgan Stanley

L Brands, formerly known as Limited Brands, met Wall Street’s expectation today with  August same-store-sales up 2%, led by strong increases at Victoria  Secret and La Senza.  Other company brands include Pink, and Bath & Body Works.

Earnings are expected to grow in the low-to-mid teens over the next three years.  The PE is 18 and the dividend yield is 2.1%

L Brands’ stock broke out of a medium-term trading range in July and rose swiftly.  It’s consolidating now between $57 and $61.  There’s no compelling reason to chase shares at this point.

Our Ransom Note trendline says..... HOLD L BRANDS.

LTD Chart

LTD data by YCharts


Crista Huff

Crista Huff is a retired stockbroker from a NYSE member investment firm. She writes about market-timing at Goodfellow LLC and is active politically.
 
TOWNHALL DAILY: Be the first to read Crista Huff's column. Sign up today and receive Townhall.com daily lineup delivered each morning to your inbox. Release of Liability: Through use of this website viewing or using you agree to hold www.GoodfellowLLC.com and its employees harmless and to completely release www.GoodfellowLLC.com and its employees from any and all liability due to any and all loss (monetary or otherwise), damage (monetary or otherwise), or injury (monetary or otherwise) that you may incur. Goodfellow LLC and its employees are not paid by third parties to promote nor disparage any investment. Recommendations are based on hypothetical situations of what we would do, not advice on what you should do. Neither Goodfellow LLC nor its employees are licensed investment advisors, tax advisors, nor attorneys. Consult with a licensed investment advisor and a tax advisor to determine the suitability of any investment.