Canwel Building Materials Ltd. (CWX.TO) Buy,…

Canwel Building Materials Ltd. (CWX.TO)

8.66

-0.08 (0.92%)

as of May 28, 2021, 8:00:00 pm Market Open.

42 watching

DON'T BUY

Building products, lumber distributor across Canada. The building/renovation market in Canada has been quite good for some time. The yield of 9.2% is too high. They are over distributing. Thinks they have some room on a line and could pay out a debt if they wanted to, but clearly that is a temporary type fix. Any slowdown in building activity would be detrimental. This is not one that he would buy.

DON'T BUY

Building products distributor. Generally you get low margins in the distribution business. He expects the housing cycle in Canada will have to slow down at some point.

SELL

Thinks he may have sold all of his holdings. Got a real bump out of the government’s home renovation stimulus program, which has now ended. With the floods in many parts of Canada this could be a soft summer for home renovations.

PAST TOP PICK

(A Top Pick April 22/10. Down 20.31%.) Distributor of building supplies. Very good business model. Hit by the end of the stimulus money. As new home buying comes off, there will be more renovation. Currently a Hold.

PAST TOP PICK

(A Top Pick April 22/10. Down 5.21%.) A hold. Reasonable distribution.

BUY

Just converted from a trust to a corporation. Have been digesting an acquisition. Account for about 8% of what goes through Rona, Home Depot and Lowe's as well as how much room they have for growth.

TOP PICK

With its recent acquisition, it will be doing about $1.4 billion of doing supplies. Well managed.

COMMENT

A distribution business in building products. Margins disappointed last year because of the mountain pine beetle creating a flood of lumber. Tied into the housing cycle. A well-managed company in a volatile business.

DON'T BUY

A distribution business that is a low margin business. Cyclical. Expects there will be more downside.

DON'T BUY

Distributor of building products. A major component of their throughput is lumber, particleboard and plywood. Got caught last year where mountain pine beetle caused massive destruction in BC. Created a much larger than normal cut which took pricing down. High volatility/high risk.

DON'T BUY

A hardware/wood product distributor that converted to a trust. Very, very low margins at around 3%. Cut distributions 30%. There is no catalyst to make it go higher in the near term.

DON'T BUY

Recently cut their distribution. They get about 45% of revenue from lumber and panels which is a volatile area. Good management. Would prefer to see them cut to about an 80% payout ratio.

WEAK BUY

Has had challenges. Not a bad entry point. You have to be risk tolerant.

DON'T BUY

Distributing products to the Home Depots and Ronas of the world. Highly levered to forest products which can be quite volatile. Housing starts have been a lot lower. Too cyclical for his portfolio.

DON'T BUY

Doesn’t feel the distribution is sustainable, so thinks there will be cut, if not multiple cuts. Feels the housing cycle will be stretched out rather than a spike. This one became a trust during a peak in housing. You might treat as a trade during tax loss selling.

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Canwel Building Materials Ltd. (CWX.TO)