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James TelfserInterfor CorpIFP.TOCOMMENTNov 11, 2015

Has been following this for a number of years. 2015 is definitely a year that you want to forget for lumber stocks. It was a horrible year. There was so much optimism about US housing that a lot of mills loaded up on lumber, and there was so much supply that it started to weigh down the price. China slowing down made it worse. This is an interesting period for lumber stocks. Companies may not order as much supply going forward into next year, which means that if next year is a good year, supply/demand is going to be extremely tight and you should see lumber prices start to improve. If that doesn’t happen, you are going to see these names struggle. This company doesn’t make money at these levels.

James Telfser

Owned

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Stock price when the opinion was issued

$11.44

As of Jun 19, 2026. Market Open.

west coast forestry

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HOLD

Demand for lumber will continue to increase.
Short term weakness in housing (recession) not a concern for long term investors.
Expecting performance for long term investors.

RISKY

Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research

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.
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DON'T BUY

Lumber went on a moon shot in the first couple of months of Covid. Housing starts are rolling over. As lumber goes, so goes the stock. Buy when it's at a fraction of book value and the chart's collapsed. Not timely.

BUY

Super cheap at 2x earnings, forecast 6x next year. In short term, lumber prices under pressure. Economic storm clouds ahead. Entire sector really cheap, but really good balance sheets. Just need stabilization in prices and a hint of an uptick, and these stocks will do well. Allowable cut in BC has gone down, so IFP mainly in Atlantic Canada and Eastern US.

DON'T BUY

With lumber companies and other commodity related companies it is better to trade them rather than hold for the long term. He sold last year in the 30 dollar plus range after buying at $6.50 a couple of years ago. Lumbar prices have peaked with house prices so be cautious.

DON'T BUY

Very cyclical, so you must watch lumber prices, which move dramatically. She avoids cyclicals, which are a trade at best. It's very tough to forecast commodity prices.

HOLD

Well-managed. The whole lumber industry had a massive run-up in prices given demand in renovations and new houses as well as supply contraints. The sector has pulled back a lot, but has climbed recently. The outlook is good. They trade at half this PEs now. The balance sheet is clean and IFP has a strong presence in the U.S. south. He likes it. Has a strong balance and generates tons of cash.

DON'T BUY

See his comments on Domain. It's a commodity producer, and he doesn't buy price-takers. He's very bearish on lumber prices; we won't be buying lumber to build decks again (after the 2020 lockdowns).

HOLD

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Commodity prices are jumping violently. The company is debt free and has excess cash. They are very cheap. Although earnings are expected to fall, the economic backdrop is positive for the sector overall. Unlock Premium - Try 5i Free

PARTIAL SELL

The easy money has been made, but he doesn't see a pullback. He doesn't see much upside. Take profits. The lumber outlook for 2022 is decent, but valuations are rich in these stocks.

DON'T BUY

Does not have exposure to lumber producers. With commodity producers, need to look at commodity prices. Probably has peaked. It was a one time surge for detached new homes and renovation products. This is not a slope change, but a one time blip. Lumber, unlike oil and gold, is renewable resource. We are seeing a supply response.

BUY

The free cashflow coming off this stock is phenomenal. Trading at 2x expected earnings this year. Forest product companies are difficult due to the fact they sell commodities. Primarily the owner of lumber mills. There is a shortage of lumber in the NA market due to continual moves by the US against the Canadian lumber industry. American housing is growing but there is not enough lumber which has shot the price up. There has been pullback recently. The cashflow is still huge and the stock is a bargain at these levels. (Analysts’ price target is $49.00)

BUY

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Investors should not expect the same level of returns over the past year. However, cash flow is increasing sharply and valuation remains very cheap. The sector conditions are favourable with jobs, rats and economic growth. Unlock Premium - Try 5i Free

HOLD

Super hot market. Lumber prices have checked back a bit, but this is short-term and they'll recover. Generating tons of free cash.

SELL

Canadian forestry stocks Lumber prices have seen a huge rise this year along with many commodities, given demand but also supply constraints caused by the pandemic. As a group these stocks are discounting $400-500 against lumber futures, which show that prices will come down. He's wary of these stocks. He would sell. The good times won't last forever, and things can change very quickly.

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James TelfserInterfor CorpIFP.TOCOMMENTNov 11, 2015

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