Shares of this wood products company were just upgraded to “Buy” at DA Davidson.
Boise Cascade Company (BCC)
from Weiss Million Dollar Ratings Portfolio
I’m going to take advantage of the current weakness we’ve seen in the industrial sector by recommending we buy shares of Boise Cascade Company (BCC–Rated B). BCC is a large, vertically-integrated wood products manufacturer and buildings materials distributor. It’s the No. 2 producer of plywood and engineered wood products, and is one of the largest distributors in the U.S.
BCC shares have been dragged down recently with the majority of companies in the industrials and materials sectors, giving us a lower-risk entry point. Its share price is down about 15% since late June and this is giving us an attractive opportunity to start a position in BCC. I believe its shares have a potential 25% upside move from current price levels, so I recommend we allocate $30,000 to this new position.
The company released second-quarter earnings last week with mixed results as sales volumes were weaker in April and May, but were partially offset by stronger sales in June. I believe we will continue to see sales rebound with the continued improvements to the U.S. housing market and economy.
The company’s strengths can be seen in multiple areas, such as its revenue growth, solid financial position with reasonable debt levels, strong return on equity, and good cash flow from operations.
I am optimistic that the company can continue to grow, not only revenue, but also earnings with improvement in the general economy and new residential construction. That leaves BCC well-positioned to outperform, not only its peer group, but the overall market as well.
David Dutkewych, Weiss Million Dollar Ratings Portfolio, published by Money and Markets, a Division of Weiss Research, Inc., www.moneyandmarkets.com/services/trading-services/weiss-million-dollar-ratings-portfolio, issues@e.moneyandmarkets.com; 1-800-291-8545, July 30 and 31, 2015