"Jim Cramer's Bold Call: Buy Louisiana-Pacific (LPX) Despite Trump's Canada Tariffs"

Jim Cramer, the outspoken host of Mad Money, has made a contrarian play in April 2025 by recommending Louisiana-Pacific (NYSE: LPX), a leading producer of engineered wood products, even as U.S.-Canada trade tensions escalate over tariffs. The call comes amid warnings that President Trump’s proposed 20% tariffs on imports could trigger retaliatory measures from Canada—a key supplier of lumber—and disrupt the construction industry. Cramer’s endorsement, however, hinges on a nuanced calculus of risk and reward.

Why Cramer is Bullish on LPX

Cramer’s recommendation is rooted in two pillars: hedge fund sentiment and sector-specific resilience. As of Q4 2024, 54 hedge funds held LPX, ranking it fifth among the top 10 stocks discussed on Mad Money. A strategy of mimicking top hedge fund picks has historically delivered 373.4% returns since 2014, underscoring institutional confidence in the stock. Cramer argues that LPX’s vertical integration—from raw materials to distribution—gives it an edge in navigating supply chain disruptions.

Moreover, the company’s focus on engineered wood products, such as oriented strand board (OSB), positions it to capitalize on trends like modular housing and eco-friendly construction. These products are less susceptible to cyclical swings compared to traditional lumber, which faces direct tariff-related headwinds.

The Tariff Threat—and Why Cramer Sees Opportunity

The risk lies in Canada’s potential retaliation. U.S. tariffs on Canadian goods, particularly lumber, could ignite a trade war. Lumber is a critical input for LPX’s products, and higher prices would squeeze margins. Cramer acknowledges this but argues that U.S. consumers may absorb some costs, as housing demand remains resilient. He also points to historical precedents: past lumber tariffs led to temporary price spikes but ultimately favored vertically integrated companies like LPX, which control their supply chains.

Another angle: Canada’s reliance on U.S. markets. Canada supplies 40% of U.S. lumber imports and 35% of crude oil. A retaliatory tariff on U.S. lumber exports could backfire, raising housing costs and hurting both countries. Cramer bets that this mutual dependence will temper the worst-case scenario.

The Case Against LPX—and Cramer’s Counterarguments

Critics, including analysts at SouthernSun Small Cap Strategy, argue that LPX’s upside is limited compared to AI-driven stocks, which have surged in 2025. SouthernSun ranks LPX sixth among Cramer-discussed stocks, noting that an unnamed AI stock has outperformed rivals like NVIDIA (NVDA) and Broadcom (AVGO) by 25% since early 2025.

Cramer counters that LPX offers a diversified play in a volatile market. While AI stocks promise exponential returns, they also carry higher volatility. LPX’s steady cash flows and 1.5% dividend yield provide ballast. “You don’t need to be in the fastest horse to win,” he said, emphasizing the stock’s role in a balanced portfolio.

The Bottom Line

Jim Cramer’s recommendation to buy Louisiana-Pacific amid tariff fears is a vote of confidence in the company’s operational strength and the limits of trade-war escalation. The stock’s 54 hedge funds backers and historical returns suggest institutional credibility, while its niche in engineered wood products offers a defensive angle in a construction sector under pressure.

However, investors must weigh the risks: retaliatory tariffs could spike lumber prices, squeezing margins, and the broader economy may face stagflation if trade tensions persist. For now, Cramer’s call reflects a calculated bet on LPX’s resilience—and a reminder that even in turbulent markets, value can hide in plain sight.

Conclusion
Louisiana-Pacific (LPX) is a paradoxical play: a traditional industrial stock thriving in a tech-driven era. Cramer’s April 2025 recommendation is backed by 54 hedge funds, a 373.4% institutional outperformance record, and a belief that trade tensions won’t derail the housing market entirely. While AI stocks may offer flashier returns, LPX’s steady growth and defensive attributes make it a compelling “buy” for investors seeking stability. The key data points? A 5th-place hedge fund ranking and a 1.5% dividend yield suggest this stock isn’t just surviving—it’s positioning for a post-tariff world.