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All fears that US tariffs are weighing on Canadian wood producers have so far proven to be unfounded.
The likes of West Fraser Timber ( WFT.TO ), Interfor ( IFP, TO ) and Canfor ( CFP.TO ) all displayed double-digit returns over the past year, Canfor's nearly 50% jump pacing the group
. the final rates ranged from 17.90% to 23.76% for Canadian lumber producers at the end of last year, after being subject to preliminary tolls in 2017.
The group was stimulated by a number of factors. American builders. The United States built homes at an annualized rate of more than $ 1.3 million for most of the first half of the year, pushing up prices for lumber. in the process. Although the underlying commodities moved back this summer, prices peaked at US $ 651 per thousand cubic feet in mid-May.
Lumber prices are strong, the United States and supply
The director of Forest Economic Advisors discusses the factors that make lumber prices go up are in record territory, including US rights, forest fires and pine beetle infestations
. Since lumber is sourced in US dollars, Canadian producers take advantage of the exchange rate advantage when they sell to US customers.
The natural geographic covers enjoyed by businesses also played a role. Pacific Northwest and the US Southeast have more capacity than their five Canadian plants. Similarly, Canfor is present in the southeastern United States, the Carolinas, Alabama, Mississippi, Georgia and Arkansas. West Fraser, on the other hand, has 24 operations in the United States that help mitigate the tariff shock.
Although residential construction activity has been resilient for most of the year, initial fears may have hindered housing south of the border. When the final decision was made, Resolute Forest Products stated that the only beneficiaries of the Canadian timber restrictions were the "big wood barons" and warned that American workers and homebuyers would lose . The success was confirmed by a series of strong results from Canadian producers. West Fraser posted record earnings in the second quarter, well above expectations. At a teleconference to discuss the performance, CEO Ted Seraphim said he was "optimistic" about the continued strength of demand for medium and long-term lumber. .
The community of badysts has not gone unnoticed. In a research note aimed at outperforming his opinion on the stock, Paul Quinn, an badyst at RBC Dominion Securities, said that a recent drop in stocks has made the company an opportunity to invest. first-rate purchase.
-term holding and the company has a multiple justifiable bonus to its peers (though a little wider than we would have liked in recent years, ") he wrote." With the combination from a slight decline in the price of the stock and our expectations for higher lumber prices for higher prices (19459013), we are more comfortable with recommend WFT. "
in the stock, although the consensus has seen West Fraser increase more modestly over the next twelve months.The stock has three purchases, four catches and no odds, with an average target price of 101 , $ 57
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