Interfor Corp (IFP.TO)

This had a nice little bump in the last couple of days. This is probably the best example of a seasonal trade. The best time to own these stocks are normally from around late January to around May of each year. After it reaches its period of seasonal strength, it has a terrible history of dropping drastically or going flat. This year, the stock has come back to its long-term resistance level. It is reaching the period of time when the stock has a history of moving lower. If you own, watch it for the next couple of days. Any strength you see will be an opportunity to take some profits.

She owns IFP-T. It has an attractive yield, being hit with declining energy prices. They made attractive acquisitions. They have a pipeline that will give them an attractive dividend for the next few years. She thinks that it will moderate going forward. It is a high quality name and well positioned. You could buy on weakness for the yield.

Canadian forestry stocks? Canadian forestry stocks haven’t done very well because everyone knew the softwood lumber agreements were in question. Instead of the 30%-50% we were all talking about, it is only 20%, which is why these have just taken a jump in the market. Seasonally, forestry stocks start peaking out around now. This one had a strong break out in January and has had a run, even past the seasonal period. He would not be looking at forestry stocks. If you own, you could hold on for now and wait for it to turn down before getting out. Also, you could use a trailing stop and move your stop as it goes higher.

It has come back and tested a previous level of resistance. It could have a bit of a jump as it tries to break out of a base.

Stay or go? He suggests you stay. It was a Top Pick two months ago. It is a bit of a play on currency and there is the Trump risk with trade wars.

Seasonally, lumber comes to an end in early January. Chart shows the stock made a little bottom at the end of 2015 and early 2016. He is looking to exit his holdings in the sector fairly soon. If you have a profit in this, he would recommend that you take it soon.

Compared to Canfor (CFP-T) and West Fraser (WFT-T), this has the least exposure to the softwood lumber issue. Only 15%-20% of their product is shipped across the US border. 60% of their production is already in the US. The housing market in the US is growing, but is still growing quite slowly because of the land restraints and labour supply shortages.

Used to own this, but thought there was too much expectation of the housing market coming through at the same time that the stock already had a big run. You want to buy these stocks in anticipation, not when it is already happening. Lately there has been a resurgence of the softwood lumber agreement uncertainty. The agreement has expired, and nobody knows how it is going to go through. This company made a number of excellent acquisitions in the US, and is pretty much balanced between the US and Canada. He would prefer to stay on the sidelines until there is some certainty on the softwood lumber agreement.

This is one of those stocks that has double seasonality. It has a very strong period of upside moves, and a very strong period of downside moves. Historically this has done very well from the beginning of October right through until April of each year. Something that is very important is the big arrangement with the Americans on softwood lumber, which is a very important issue for this company. They will be directly impacted by whatever the agreement is. Wait until you see what happens with that dispute.

It is the 4^th largest lumber player. Lumber has been strong lately partly due to a strong US dollar. 75% of sales are from the US. They are one of the better operators. The valuation is reasonable and it scores in the top 10%. It also could be an acquisition target.

(A Top Pick Nov 9/15. Up 34.33%.) Recently sold his position. There have been some headwinds around the lumber business in Canada due to the softwood dispute.

It has an implicit value of $20 per share so there is significant upside. He would not cut losses at this juncture. There is not that much more downside. It is an opportunity.

This has fallen below the 50 day moving average as well as the 200 day. It has had 2 corrective periods. Thinks that is pretty well done and it is trying to build some kind of a base. If you give it a bit more time, he thinks it will run up and test the peak at around $20.

A lot of the forestry stocks tend to do well until they run into the spring buying season for housing. Between November all the way through to April, there tends to be a big run up. From February up through to April, this had a pretty substantial run from $8.67 all the way to $14.50. Now it is just bumping up against the 200 day moving average. Wait for the breakout which could be coming in the near future, especially if housing continues.

Housing cycles tend to be fairly long. In the US there has been a great improvement since the financial crisis, and that continues to happen. In Canada we have a slightly different problem with people talking about an overvaluation of housing. This one is probably not a bad place to be.