Here's Why You Should Hold On To Universal Forest (UFPI) Now
Zacks Investment Research | Sep 18, 2017 10:00PM ET
We issued an updated research report on Universal Forest Products Inc. (NASDAQ:UFPI) on Sep 19. A large customer base, impressive near-term growth opportunities and synergistic benefits from acquisitions will prove advantageous for the company. However, headwinds related to international operations, rising costs and expenses as well as industry competition might restrict its growth momentum in the near term.
It currently carries a Zacks Rank #3 (Hold).
Below we discuss why investors should hold Universal Forest’s stock for now.
Growth Drivers
Diversification Benefits: We believe Universal Forest is poised to benefit from its vast customer base — including retailers, distributors, builders of single and multifamily homes, and others — in the retail building material, construction and industrial end markets. Also, international diversity has played a major role in building the company’s profitability over time. It operates through its subsidiaries in North America, Europe, Asia and Australia. The company is working hard to strengthen its foothold internationally.
Inorganic Strategies and Shareholder-Friendly Policies: Universal Forest remains keen on making meaningful acquisitions to expand its foothold in unexplored markets and enhance its product offerings. Notably, acquisition of certain assets of Quality Hardwood Sales, LLC and completion of Robbins Manufacturing Co. buyout in March 2017 are noteworthy. These two acquisitions are likely to fortify the company’s position in the hardwood products market, improve its customer base and bolster sales, going ahead. Also, the company acquired Go Boy Pallets, LLC in May. This buyout has expanded its industrial packaging business.
Share buybacks and dividend payments are the prime means of returning value to shareholders for Universal Forest. In first-half 2017, the company repurchased shares worth $9.9 million and paid dividend of $9.2 million.
Promising Near-Term and Long-Term Targets: We believe that initiatives to rebuild homes, offices and infrastructure damaged by Hurricane Harvey will spur growth for products offered by Universal Forest Products.
In the last month, shares of Universal Forest have yielded a return of 13.3%, outperforming roughly 9.1% gain of the Zacks Investment Research
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