If it's good to be in a market where demand is rising, it's even better to be in one where that demand is producing big price hikes. That's where Louisiana-Pacific is these days: Prices for its core oriented strand boards rose 50 percent from a year ago during the third quarter, boosting the company's adjusted EBITDA by a whopping $71 million.
That dynamic, which has helped LP shares (Ticker: LPX) climb more than 120 percent in 2012, has some staying power. ERA analyst David Elstone says OSB prices should continue to rise quickly early next year, climbing more than 15 percent from their current level of $345 per thousand feet. But Elstone adds that the window for outsized gains could close soon after: He sees OSB prices falling back to current levels by Q3 and quickly sliding another 20 percent from there as a bunch of new supply — including an LP plant in Alabama — comes back online.
After that, what will really matter for the bottom lines of LP and its peers is just how healthy the new construction market is.