Norbord Inc (OSB.TO)

(A Top Pick June 23 / 17, Up 42%) Tied in to housing industry. Softwood lumber and tariffs don’t bother this stock at all. Good supply and pricing. Earnings going up, good fat dividend. Expect continued good gains in next earnings.

Impacted by NAFTA? Diversified manufacturing base, so no big NAFTA impact. Housing market continues to look strong. Cheap stock, nice dividend, nothing bad to say. Risk is if correction in OSB prices, how will stock react in near term? If stock corrects, good time to buy. Volatile, based on underlying commodity. Well run, excellent management, lots of free cash flow. A good core holding in this industry.

They are one of the largest producers of OSB boards and it is tied closely to the US housing cycle. There have been rumours that one of the new OSB plants was having trouble getting started up. Overall a good company, but it is highly cyclical.

This is part of strategy of trades in the particle board space. It has a 19% pay-out ratio and a 17% sales growth. They have reduced debt by 32% and the ROE has improved to 39%. Yield 4.9%. (Analysts’ price target is $49.71 )

He is constructive on this name. US housing has been underbuilt for many years. That is a driving force. Good balance sheet. Good place. Past top pick.

Lumber is at a 24-year high. Dividend payout ratio is at 75% for 2018-2019, so you are going to continue to get paid. Even though the stock is $48, it is still fairly cheap relative to its peers. Trades at 5X EV EBITDA, versus its peers of 7X. Feels the market could tighten. Just had a big run from $44-$48 in the last week or so, but for a slightly higher risk, you could buy more of this on a pullback.

He still likes it. It has been frustrating. It was a pick 6 months ago. There is a bit more fear of capacity increase coming on. Hurricane-created demand has gone down. Brookfield has been selling large blocks of this one. He feels we may be getting closer to the end of the cycle for this one, even if we are not there yet.

Hold? He would watch the $40 level. That is a good support to use as a buying opportunity. If it fell below $40.00 2 weeks in a row, then the uptrend is over.

He owned lumber in the past. Right now lumber is better than this.

An incredible success story. There is a rebound in the housing market in the US. This stock is now relatively expensive because it has had such a good move, but there is nothing to stop it because the housing market in the US seems like it is getting tight.

Oriented strand board. He’s looking for ways to get a piece of the action in US housing, which still has a decade of catching up to do. Their big problem is getting people who know how to nail a board together. The industry is really short of skilled labour, and there is a shortage of new houses and new construction. A company like this, which produces a product very similar to plywood, is very good. Sees a rising dividend in this. Dividend yield of 5.7%. (Analysts' price target is $50.50.)

The largest OSB maker in the world, with 17 plants in Canada and the US. He is looking for a break out in the homebuilders’ ETF. Analysts have cranked up estimates by 33% in the last 90 days. Has a 38% ROE on a trailing basis. Dividend yield of 4%. (Analysts’ price target is $51.21.)

A major maker of particleboard that goes into buildings. It is going to be a major beneficiary of the hurricanes, especially in Texas and Florida.

He recommended it back in May. This was without a hurricane. They are in the South East in the sweet spot. (Analysts’ target: $50.00).

US home builders are the driver. It has good price momentum. It has great valuation. It is cyclical, but you aren’t paying a lot for it. (Analysts’ target: $50.00).