Western Forest Products Inc. (WEF.TO)

It depends tremendously on US housing starts. Things are slowing down a lot in China and US housing starts have slowed a little. There are new import duties into the US based on the price of the lumber. The logistics of getting the logs out of the woods and transported can be a challenge. Dividends are often not sustainable during downturns. Don’t over pay for it and then you have to ride the cycle. He prefers CFF-T.

He likes this a lot. Have been struggling because they have been exposed more to exporting a lot of specialty products to China. Haven’t bounced back as fast as the other players. Prefers Interfor (IFP-T), which is doing a lot more on the acquisition front in the US. In this part of the cycle, he is seeing lumber prices get back to $300. Having a lumber exposure in your portfolio is going to be key because they are still cheap in this part of the cycle.

They had the largest monthly jump in a long time, but he still thinks the forest stocks are a little high.

Likes the overall thesis of strong US housing, increasing lumber shipments to Asia, combined with relatively modest supply increases and even supply degradation because of the mountain pine beetle in BC. This company in particular is interesting because they have a lot of non-core assets, such as ownership of a lot of real estate on Vancouver Island that is being redeveloped as resort properties. Also, pays a fairly attractive dividend. Should be worth $2.75 to $3.00. Over the next 12-24 months the outlook for this sector, and lumber prices in general, is very good.

Forest products in general tend to do rather poorly during the summer. They tend to get a big run up from October until November in anticipation of the spring building season in the US. Chart shows it had a huge run up from October into January/February, and then trended lower. Not one you want to focus on during the summer.

It bounced around quite a lot, but it is a company in the forest sector that is cheap and pays a nice dividend. Brookfield is mostly out of the stock. The dividend is about as safe as you can get in the sector. 3.6% dividend.

A weaker Canadian dollar benefits them. Lumber is up about 10% as a commodity in the last two months. Has some pretty good price momentum. It is not the greatest score on momentum, but it is on valuation.

He is bullish on lumber. Thinks it is just the beginning on US housing starts. The whole group is rallying and it is a good place to be. He sees no problem with this stock.

People rotate into these if they think the Canadian dollar will depreciate so you should see some benefit. It rolled back a bit because of a temporary strengthening in the CAD$ in the last month or so. This stock should do well as lumber prices increase as it goes into the period of seasonal strength. It is a relatively high quality name.

Lumber has a distinct seasonal pattern. It is really related to homebuilding and that hasn’t changed for the last 50 years. Tends to do well from October into March and April. Lumber tends to be weak at this time of year, so this is not the time period to be stepping in. Wait until the fall.

Got hit like all of the lumber stocks. Reported and had a very tiny miss. Prices were recovering for a bit and now have flattened out. There is probably one more “not so great” quarter and then lumber should move. If you are patient, he would continue to hold.

It has been a tough market. Lumber prices have really come down. She is watching it.

Majority of their sales is to the US and overseas, which should have a positive effect. Stock is a little bit unusual in that it bounces around with the US sector. Sentiment on housing is a big, big factor. If you ignore all the background noise, it is a good company with a good dividend and a good product with the potential to grow earnings quite substantially. Very, very cheap valuation. From a sector point of view, it is one of his favourite companies. He would put this in the top 3 in the forestry sector as to what to Buy.

Interfor (IFP-T) or Western Forest Products (WEF-T)? He doesn’t really like either of these right now. They are both currently in downward trends. The price of lumber for the last month or so has virtually collapsed, and that is starting to have a direct impact on these lumber stocks. Lumber stocks have very strong seasonal strengths in both directions. They tend to be strong in October right through until March/April, and then from April to October they go down. Better opportunities elsewhere.

Stock has really underperformed the sector. This is actually a good buying opportunity. A very attractive dividend of over 4%. They ship a lot of product to Asia as well as the US. They have the benefit of the weaker Cdn$ also. There has been a slowdown of log shipments to China which this company is exposed to. A unique thing is that they have a big land position, and there is speculation that they could sell off some of that.