Western Forest Products Inc. (WEF.TO)

Will probably live and die with the US housing cycle. Housing starts for January were re-stated higher. Housing starts are at pretty good levels. Their costs are in Canadian dollars and they sell the product in US dollars. It is not a bad idea to go back into this sector.

It is very much China / Far East oriented. It ought to be better. Lumber prices are quite low right now.

The stock is cheap based on current earnings forecasts. When you get to a valuation peak in these things they tend to look the cheapest. When they get to their lows their earnings vanish and they look ridiculously overpriced. Right now they look ridiculously cheap. We are getting a very mixed message about US housing. He hopes there is a part two to the bull market.

Missed a quarter recently, and the stock pulled back, but pulled back significantly. The group also pulled back. All of a sudden there is some doubt of the veracity of US housing keeping going. China is slowing, so there is a little bit of that built-in. Under $2 is a Buy story, but you have to believe that US housing is going to come back over the next couple of years. This gives you a nice dividend.

This was for US housing, which was looking very good in the last 2-3 years. However, we have started to see the number of housing starts starting to fall off. The squeeze on real income in the US remains. If there is any increase in mortgage rates, there could actually be a pullback in housing starts.

A 3 year chart shows some support at around $2. You want to see this make a successful test by bouncing off $1.90-$2, which is its support. This may be an OK buy. You have resistance at around $2.80.

They are down because they disappointed the market. Log sales are down as they compete with Russia and ship less to China. He would prefer US home builders to leverage on the US home recovery.

Has now pulled back to $2.25, which is around the area where he sold his holdings. Lumber is priced in US$. They sell a lot into the Japanese markets, and with pricing where it is and with the Japanese economy, this has been a natural pullback. They will participate in US housing to some extent. He is not tempted to go back into this at this time.

(A Top Pick Jan 6/15. Down 10.57%.) Forest companies were really hit hard over the last couple of weeks. Thinks forest stocks are a global thing. Trees are wanted all over the world. This current down is probably a buying opportunity. The trend is still higher, so you want to acquire at these lower prices.

Earnings just came out and were disappointing. The US housing side hasn’t really taken off the way he would have thought it would. There are some really interesting structural psychological aspects to this, and it shows. When there is a housing collapse, young people tend to rent rather than buy, even though they can afford it. Housing starts are still not even close to what would have been expected. Dividend is safe.

Lumber prices had been a little soft in the last couple of weeks because of a bit of worry on US housing. Feels the group is a huge beneficiary of a weaker Cdn$, and that US housing is going to be fine. Despite a two-week drop in spot lumber, it will come back later in the year.

Recently added this to his fund. Has tremendous exposure to the increase in housing construction in the US. Also, they were not as impacted by the pine beetle scourge. Trading at about 6-8X PE. Has a pretty good outlook this year.

Mid October until the end of February or even April is the period of seasonal strength. The longer term trend is up. It recently broke to new highs. It is above its 20 day moving average and it is outperforming the market. Plan on holding this until at least the end of February.

Had a big move so far this year and part of last year, but there is probably a lot of room to go yet in the forestry stocks. The low Cdn$ is going to translate into increased profits on their revenue. He has his eye on this one. Prefers Interfor (IFP-T) which ranks ahead of the rest of them from an earnings standpoint.

Lumber is one of the few commodities that is operating countercyclical to the broader global commodity basket. Lumber put in a long-term bottom in 2008, so the current bull in lumber is relatively new. The sector is buoyant. This company has a good looking chart and is currently trying to make new highs. A good place to hide. Also, keep an eye on the ETF iShares S&P Global Timber & Forestry (WOOD-Q).