Boise Cascade Company 's BCC shares have gained more than 37% in the past year, outperforming the 13.3% growth of its industry . After all, overall outlook for the construction sector remains positive, with a healthy economy and strong job market continuing to drive stocks higher.
Moreover, the Zacks Consensus Estimate for earnings for both the first quarter and the current year has increased 50% and 20.3%, respectively, in the last 60 days, thus reflecting optimism in the stock's earnings prospects (and share price), and substantiating its Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .
What Makes Boise Cascade a Solid Pick?
Unique Business Model and Steller Performance: Boise Cascade is a wood products manufacturer and building materials distributor. The company's distribution footmark in the country and vertical integration (internal manufacturing) uniquely position Boise Cascade to take advantage of a positive housing scenario. The company has 32 distribution locations spread across the United States. This helps Boise Cascade to serve a major metropolitan market. Again, by manufacturing some of the products it distributes, the company's manufacturing business has greater access to the market.
Boise Cascade ended 2017 on an impressive note owing to robust quarterly results. Adjusted fourth-quarter earnings increased significantly to 28 cents per share from 3 cents a year ago. Revenues also grew 13% year over year on higher sales across the board.
Importantly, Building Materials Distribution segment's (accounting for 73% of revenues and 55% EBITDA) sales increased 17% in 2017 driven by 9% higher price and 8% volume increase.
Solid Industry Fundamentals: The company's business is exposed to new single-family housing construction market, and repair and remodel. The housing/homebuilding industry has been riding high on steady job and wage growth, and rapidly increasing household formation. There's no denying that growing labor shortage and limited land availability are causes of concern. That said, the overall outlook for the residential construction industry remains positive with a healthy economy and strong job market that will continue to drive stocks higher. Boise Cascade also remains positive about the overall housing market, and expects to continue experiencing modest demand growth for the products it manufactures and distributes in 2018.
Solid Estimated EPS Growth: The company's first-quarter earnings are expected to increase 73.1% year over year. The company's EPS is expected to grow 39.8% for the current year, higher than the industry's average projected growth of 27.7%.
Meanwhile, the company's sales are expected to increase 11.1% in the current quarter and 7.7% for the current year.
The above mentioned tailwinds have made it a great pick in terms of Growth investment. The stock has a Growth Score of A.
Other Stocks to Consider
Other top-ranked stocks worth considering in the same space are Louisiana-Pacific Corporation LPX , PotlatchDeltic Corporation PCH and Trex Company, Inc. TREX .
Louisiana-Pacific sports a Zacks Rank #1 and is likely to witness a rise of 16.3% in earnings for the current year.
PotlatchDeltic, a Zacks Rank #2 (Buy) stock, is expected to witness 26.3% growth in earnings this year.
Trex, also a Zacks Rank #2 stock, is expected to witness 32.9% growth in 2018 earnings.
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Trex Company, Inc. (TREX): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
