Western Forest Products Inc. (WEF.TO)

It broke support but it was in late August. He discounts that because of market conditions. Wait and see if it can get back over the old support. At this point he would not touch it.

This is one name you could consider. Most of these are dependent on US housing, which is depressed from where it was but is certainly coming up. You have a very bad macro economic backdrop where people are questioning global growth. But overall this and US housing are looking better than they have in a long time.

Lumber prices in general have been turning down. There is a little bit of uncertainty about growth in China, and Japan a little bit. Single family home starts in the US, the driver for lumber demand, haven’t really rebounded to the post crisis lows. Also, the softwood lumber agreement is coming up for expiry. Lumber stocks can be very sensitive to those issues. A quality company. Earnings last quarter were pretty good. They did a lot of specialty sales. Not a bad holding.

It is a bit small and less liquid than what he normally buys. Lumber prices are low, but US housing prices are recovering. They have exposure to Asia and there are concerns about weakness in lumber prices. If the US continues to grow and expand they may do well. He is actually looking at stocks in this sector.

This is one where you don’t just look at the stock, but you have to look at the sector in general. If you have enough, you are probably better off sitting with it.

(A Top Pick Sept 13/14. Down 24.49%.) This will be a beneficiary of the US housing story. The company itself hasn’t had a big stumble, but the group is down as prices haven’t rebounded so far this year to where he would like. 4% yield and you get paid while you wait.

Very perplexing. When you look at housing starts in the US, they are up to 1.2 million from 600 million, as a base, that is a positive. The Cdn$ being weak is also a positive. Yet lumber stocks haven’t done anything. Thinks we are going to start seeing lumber make a bit of a turn around here, anticipating a better spring building season. Wouldn’t be surprised if we go to 1.5 million housing starts, which would be very, very good for lumber stocks. You have to be able to accept the risks. They are highly volatile investments.

With respect to the US housing industry, you would expect these companies would be acting better. There has been pressure on the commodity prices. They send a lot to Japan whose prices have been quite a bit lower. There is also worry about lower demand coming from China. They have a good balance sheet and a dividend yield over 4%. Appears to be at a very inexpensive price of the moment. He has not been tempted to jump back in on this one, but is keeping his eye on it.

We took to the end of last year to get back to where we were at the start of the financial crisis. We are in a period of bullish congestion. It is up today like most commodities. He thinks it will break out above recent peaks. This is a bell weather. It is a sector he would favour. If you are in it, hang on to it.

This is a stock that was moving up fairly rhythmically, and then found a holding pattern. Has been bouncing fairly erratically, but still relatively range bound. It doesn’t look like a bad chart and he would say it is a good trader until it breaks out one side or the other.

Keeps looking at the sector, but hasn’t bought it yet. US housing starts are starting to pick back up and looking better all the time. This company is a big beneficiary of that. The US housing market has to come back because of demographics are showing that it will.

The biggest single factor for the industry is a weaker Canadian dollar. This stock is in a holding pattern right now as the Canadian dollar settles. It is probably range trading right now. You could trade the range for the next year or two, but in a couple of years the Canadian dollar should be back to $0.90 and so this stock will come back again.

It depends tremendously on US housing starts. Things are slowing down a lot in China and US housing starts have slowed a little. There are new import duties into the US based on the price of the lumber. The logistics of getting the logs out of the woods and transported can be a challenge. Dividends are often not sustainable during downturns. Don’t over pay for it and then you have to ride the cycle. He prefers CFF-T.

He likes this a lot. Have been struggling because they have been exposed more to exporting a lot of specialty products to China. Haven’t bounced back as fast as the other players. Prefers Interfor (IFP-T), which is doing a lot more on the acquisition front in the US. In this part of the cycle, he is seeing lumber prices get back to $300. Having a lumber exposure in your portfolio is going to be key because they are still cheap in this part of the cycle.

They had the largest monthly jump in a long time, but he still thinks the forest stocks are a little high.