Interfor Corp

IFP-T

What would you buy in the forest sector? He has little exposure here. Lumber stocks were hurt with American trade talk, though they benefit nicely from a lower Canadian dollar--and he thinks the CAD will decrease more. Buy IFP-T.

(A Top Pick Nov 3/17, Up 54%) They have all done really well. This one is the 4^th largest lumber player. The valuations now are not as cheap as when he bought them but the price momentum is still there. There is always a chance that someone takes them out. They have 60% production in the US so all tariffs would do is drive the price higher.

It is oily Alberta that has almost ‘stranded’ oil. It has been stagnating due to the Alberta problems with where do we go from here. He prefers EMB-T.

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.