Hap (Robert) Sneddon FCSIAcadian Timber CorpADN.TOHOLDNov 26, 2015

Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research. Timber demand supported by US housing. Premium valuation but attractive dividend. Lost backing from BAM. Stock is sensitive to lumber prices. Unlock Premium - Try 5i Free

Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research. Long-term demand supported by new housing. Heavily dependent on the commodities market. Good financials and growing asset base. Diverse revenue mix. Unlock Premium - Try 5i Free

This gives you equity-like returns on assets like timber, that grows every single year. There are going to be big benefits from them if the US housing market continues to recover. When he does the math on their acreage and what the stock is trading at, it is undervalued by at least 20%. In the meantime, you have excellent returns. They have grown the dividend twice already in the past few years. On pullbacks this is one to own. Dividend yield of 5.8%. (Analysts’ price target is $19.)

The best buy in lumber? He is kind of avoiding materials right now. The only lumber material stock he owns is Acadian timber. They own trees in New Brunswick and Maine, with a good track record of increasing dividends. All the lumber stocks are at risk with what could happen with potential trade issues with the US, as well as softwood lumber duties that are in sight. If you have a long-term view, this is an excellent opportunity to get in.

An east coast company with a lot of resources. Unfortunately, they have the softwood trade dispute with the US which is causing uncertainty. It has a decent dividend and is a good little company. He would use a little caution as he has no idea what is going to happen with the trade dispute.

(A Top Pick Nov 23/15. Down 3.11%.) The only pure play in Canada that he knows of, that owns timber land. No capital expenditures whatsoever. The market is probably worried about the softwood lumber dispute.

A couple of years ago, the whole plan was to utilize their Brookfield relationship to expand and make acquisitions and make this a much bigger player. That has been slow to come to fruition, but is still very much possible in terms of what they could and could not do. Has some Eastern Canadian and US exposure. It depends largely on housing and construction, but with their Brookfield relationship, there is still plenty they can do. A patient, waiting game, but a nice little company while waiting.

The most important thing in lumber is that it looks like they are going into another softwood lumber agreement. US Forest companies are big landowners and have a big lobby. We were saved last time, because Asia started importing a lot of our West Coast trees, so the company sort of skated on side. Asia is having its own problems right now, so figuring out what the volume should be, having a softwood lumber agreement on top of it, along with our low currency really impacts these companies as to what the probability is. It should be a great time for these types of businesses.