Rick Stuchberry
Norbord Inc
OSB-T
COMMENT
Aug 29, 2019
The US housing market has been lack luster for the last year. Yet the consumer is strong. But they are spooked from '08 when they almost lost their house. It is never wrong to take a profit. You could wait for it to pull back and then buy back.
For longer term, if you hold it, not a bad time to be averaging down. Need strong rebound in US housing market to get material lift from here. But don't put new money in.
He thinks we have seen house prices turning the corner. He likes it here. March sales beat expectations in the US. Prices of houses is what drives this stock. Variable dividend that pays you to wait. If you think that we are going into a recession (he doesn't) you don't want to own this name.
The book value has been steadily sliding lower. He thinks there could be upside to $40, but watch for support at $31 -- if it breaks below that watch out. The economy is questionable and the US housing market is in the sewer.
OSB-T vs. CFP-T. Looking at a long term chart of lumber futures, we are getting back to levels from when the economic levels were much weaker. Individually he is not sure that the prices are washed out. There may be more downsides in the more economically sensitive names.
The OSB manufacturer for roofing and flooring. Prices for products has collapsed and new capacity is coming on-stream. She would not be buying a commodity based stock like this. If you are long already and the US economy continues to grow and interest rates do come down there may be upside in the housing sector. The over capacity issue is an overriding concern for her, however.
It's a cyclical. Trade it, not an investment. $45.54 is his model price. Pays a good dividend. This goes lower in a recession. Buy around $28, but sell if it falls below that.
This was a great performer in 2017-18, but with housing starts--and the economy--slowing in the U.S., it's under pressure. Tariffs to lumber didn't help. The yield pays over 5%, but in this late part of the cycle, OCB is likley not covering the dividend every quarter. They should trim the dividend. He prefers WEF for their dividend and high-end niche. That said, you could pick away at this sector when it's been beaten up like this.
Doesn't follow the name super closely. Positives in the industry. Good growth trajectory. Still a good name but volatile, as it's tied to the price of the commodity. Low interest rates should benefit it.
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