Q: Hi there,
I’m reading about the impact that the forest fires is having on lumber industry and lumber prices have jumped since the end of May. What’s your thoughts on a short term trade in IFP or one of the other lumber companies?
I’m reading about the impact that the forest fires is having on lumber industry and lumber prices have jumped since the end of May. What’s your thoughts on a short term trade in IFP or one of the other lumber companies?
5i Research Answer:
If IFP can meet earnings estimates it is very cheap. Debt is still higher than most, but in a rally investors tend to ignore debt. Thus it can be a good trader. Fires can be both good and bad for the industry. Impacted companies of course can be hurt, but prices can also rise if a wide area is affected by fire. But this can be short-lived, as salvage logs can hit the market shortly after a fire. In 2021's fires, IFP had a net positive impact but its was very short term.