Q: HI guys
I remember Ross Healy saying early in his career he covered forestry stocks as an analyst, and he commented that the time to buy these stocks is not when everything is rosy, but when there is blood in the streets in terms of of bad news and low building starts. In terms of valuation, and longer term opportunity and appreciation is there any reason to buy lumber companies now - like West Fraser - which I know you have liked in better times?
Much thanks
stuart
I remember Ross Healy saying early in his career he covered forestry stocks as an analyst, and he commented that the time to buy these stocks is not when everything is rosy, but when there is blood in the streets in terms of of bad news and low building starts. In terms of valuation, and longer term opportunity and appreciation is there any reason to buy lumber companies now - like West Fraser - which I know you have liked in better times?
Much thanks
stuart
5i Research Answer:
The Globe and Mail highlighted the sector on the weekend, and came to the same conclusion. Right now tariffs are hurting, but the US still needs our lumber. Sentiment is very low, and we think a trade set up is occurring. However, with some more economic uncertainty, we might wait for year-end tax selling here and start accumulating into any further weakness. We do think potential buyers have some time. But when the sector goes we would stick with WFG, with it being in a much stronger position than the other Canadian names. The balance sheet is strong with more than $300M net cash.