The Panic-Proof Portfolio (Stockchase Research)West Fraser TimberWFG.TOTOP PICKFeb 07, 2023

It's struggling. The chart was rangebound, then broke out, but got his by tariffs last year. It has since broken down and he got stopped out. The bounce at $100 in mid-2025 didn't last, but kept sliding.

This one plays again into the market-cycle model. The 10-year chart is helpful -- we're in the "boring middle" of the market-cycle model. That's actually where the economy starts to strengthen. He believes rates will essentially be sideways, which should remove a headwind for homebuilders. Should make it more likely that we see a pickup in housing starts and housing in general. That backdrop should be positive for lumber stocks. Yield is 1.78%.

Some lumber stocks have more torque, such as IFP. His firm's lumber analyst covers, and likes, both these names.

As well, "smart money" is long on lumber. If they like it, he likes it.

#1 would probably be Telus. BCE is also in there. Names like AC, MFI, PRL, GSY, WFG, and TFII. All of these stocks are cheaper than they ought to be. All things being equal, those names should be higher in January than they are now.

Hasn't owned any lumber in recent years, very cyclical. Weak demand for lumber, plants are closing. Hit by tariffs. Can make a lot of $$ when things go the right way, but then there's over-capacity and prices tumble.

Could be a candidate for tax-loss selling. If it's in a non-registered account, consider selling and apply the loss against your gains.

Example of a stock that's a really tough call right now, simply because current business outlook is so absolutely miserable. But this is actually when he starts to get interested in companies -- when you have the worst-case situation.

He recently started buying IFP.

(All the past picks today were from October, when he thought we were late cycle. His view is that we've started a new cycle, so tech and consumer discretionary risk-on names should do better.)

Usually a really nice trade if you buy at Halloween, sell at the Super Bowl. Chart shows tariff impact since February. Trying to form a base. If he's correct on his market cycle call, lumber won't pick up until next year.

(Note the short timeframe.) Chose this based on historical seasonality for lumber. Surprised those stocks aren't acting better, especially since the California fires.

Sounds counterintuitive, but WFG and trees are going to be beneficiaries. US still needs them, just going to pay higher prices.

GRT.UN is a good name. PKI works well here. Materials sector, with a name like NTR. 

There's even a part of the TSX that does well with a falling CAD, as earnings get amplified.

It is up 20% from July. The price today is pricing in expected improvements for three years from now. Interest rates in the U.S. are still high so lumber prices may not improve that much. If investing in the lumber industry he would look at Interfor.

The chart has been steady despite plunges in the timber price. Impressive. But he wouldn't enter this now.

Very volatile and cyclical, which she tends not to invest in. In a downturn, these companies can really lose money. Not a long-term growth company. Recent pop may be anticipation of US rate cuts benefiting home sales. Secular housing shortage in both Canada and US.

His colleague has a saying, "Buy at Halloween, sell at the Super Bowl." Really likes the breakout to new all-time highs. Anyone who's bought in the last couple of months is in the green, very positive. Likes the setup for a seasonal trade into January. Yield is 1.28%.

Homebuilding stocks in the US have been going straight up, but Canadian forestry stocks have been going the other way. This name has done the best and held its share price.

IFP and CFP have really started to bottom on the charts. He hasn't done enough digging to know who has a better earnings profile. But looking at the charts, one of these might be a good bet to catch up to WFG and to the US homebuilders. Lower interest rates will have an impact as well.

TOL is one of the biggest homebuilders in the US, and a leading indicator. When it starts to go, as it has in the last few days, it's usually good for the lumber stocks.

Shows the struggles in forestry and wood products. Now in the part of the cycle of reducing capacity. US market is what will drive the upside, but rebound could be 3 months or 2 years away. You could start looking at it.