We believe that Universal Forest Products, Inc. UFPIis a solid choice for investors, seeking exposure in the building products space. Strengthening product portfolio, rising demand for repair and remodeling activities, healthy housing starts and synergistic benefits from acquired assets will be advantageous for the company.
The stock, with approximately $2 billion market capitalization, has been upgraded to a Zacks Rank #1 (Strong Buy) on Apr 14. Its investment appeal is further accentuated by a VGM Scoreof B.
In the last six months, the shares of Universal Forest yielded 1.6% return, lower than 8.3% gain recorded by the industryit belongs to. However, this return was above the 1.4% decline recorded by the Zacks Construction sector.
Why the Upgrade?
A strong brand image and efforts for further improvements in the portfolio add to Universal Forest’s appeal. New products were a hit in 2017, especially those introduced in the UFP-Edge and Deckorators portfolio. In 2017, revenues from new products grew 23.5% year over year while sales growth of 7.6% to $450 million is anticipated for 2018. Notably, in January 2018, UFP-Edge introduced seven new colors for its Charred Wood product line. These new additions will be available in shiplaps and board forms.
Additionally, Universal Forest’s business expansion initiatives, through the acquisition of meaningful businesses, have proved beneficial over time. In this regard, the acquisition of idX Holdings in 2016 is worth mentioning. This buyout is anticipated to generate $290 million in revenues as well as save on costs in 2018.