Canfor Corp (CFP.TO)

It is doing well despite the problems around NAFTA and WTO. The millennials are getting into the housing market and that is a long trend, which this company benefits from. The US will need the lumber for all the houses needed. He is positive on forest products stocks.

CFP-T vs. CFX-T. CFP-T has more leverage to building products. He prefers it over CFX-T. He does not invest in pulp.

He likes this as a company, but as long as we are in this interminable fight over softwood lumber duties, he wouldn’t go anywhere near any of these stocks. Once this dispute is resolved, and it will be eventually, this could very well be a Buy.

Valuation is very cheap. Lumber is a hugely contentious issue between Canada and the US, which is one of the problems this industry faces. Also, household formations have changed and many generations are just opting to live in condos, etc. There are under 1 million units currently in the US versus 1.4 million historically. He doesn’t think this is going to pick up meaningfully. Any little uptick will be positive for it.

Ranks a bit outside of his fundamental and technical screening. The stock is yo-yoing which has to do with housing starts and new home sales.

His style of investing usually leads him away from resource focused stocks, because they are cyclical and his requirement that they have a cash ROE greater than 20% over the last 3 years. However, this company has come through his screen and their cash ROE is just shy of 21%, so if he were to own one, this would be it.

Despite a strong US housing market, overseas is not doing that well. There are a lot of people that have been caught holding the stock, and will start selling above $20 as soon as the price recovers. The stock is under pressure.

(Market Call Minute.) Lumber is probably the poster child for seasonality. The time to own is going into the 4^th quarter. There has been some improvement in housing which favours lumber producers, and this is one of the best suited. He would look toward September.

Lumber is something he doesn’t want to be playing in right now. He would prefer OSB through Norbord (OSB-T), which hasn’t really been impacted by Chinese dumping, and benefits from a low Cdn$.

When a sector has been out of favour, he looks for companies that have been better than the rest of the group. In forestry he prefers to look at something where there is a tailwind, such as Stella Jones (SJ-T), which creates pressure-treated wood for railroad ties and utility poles, with a lot of stuff selling into the US.

Lumber demand has been somewhat weaker. The Chinese have stopped buying. She is positive on US housing so this one can work eventually. She prefers to play US housing differently with companies that are less cyclical like HD-N.

This is one that looks okay. It had a really good run and has now come back and tested the run, and then started back up again. Chart shows that it has tested a 2011 high, which becomes the support level. It looks like it is finding a range which is nice.

Traded his holdings out as this was a highly cyclical stock. You are there for a good time, not necessarily a long time. Had originally bought at $19 and sold at $30. This is on his watch list. It could be close to a $30 price target. This depends on US housing and he is bullish on that. Also, he is looking at what is happening in China and demand for our lumber. A little nervous about a revival in the softwood dispute with the US. That expired October 12 and the US has a year to go back to court to try and get more tariffs put on Canadian lumber. However, this company has been acquiring lumber companies in Arkansas and Louisiana, so the US side is up to 27% from 24%. That will offset this to some extent.