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.
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.