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Opinions Bill Harris, CFA
West Fraser TimberWFG.TOCOMMENTJul 28, 2015
Stock price when the opinion was issued
As of Jun 19, 2026. Market Open.
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A name to consider over the next 3-5 years. Overall, an interesting place to be looking, though stocks have been hit so much since the pandemic heyday. Governments are pushing new home builds, and that should help prop up the market. The renovation market will be impeded by people's ability to spend.
WFG’s operating results heavily depend on lumber prices, of course, but the housing sector seems to be recovering and if interest rates peak the sector could do well. WFG is now trading at only 0.9x times' Price/Book. Lumber prices have gone down substantially from the peak in COVID due to a supply and demand mismatch. The company's balance sheet is strong, with net cash of $460M. The company has been repurchasing shares aggressively, which we like. WFG is quite cheap, considering a possible recovery for lumber going forward. The company remains our favourite in the sector, and is well-managed. Interest rates and the N. American economy overall remain the key influences. We would be comfortable starting a position.
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Materials sector. Lumber has been in a sideways consolidation, so an entry here is timely. Add towards the bottom of the trading range. Housing market will pick up later this year or early next, and the lumber names should push higher. Relative strength starting to turn up. Yield is 1.55%.
(Analysts’ price target is $139.44)Premium contentWFG share prices were negatively impacted initially by the announcement of the "indefinite" curtailment of their Florida mill due to lagging lumber demand. The decision is helping to improve earnings and allows management to focus on its key assets. As a result cash reserves are already allowing a sizable buyback of shares. Now analysts expect housing demand for lumber to improve over the balance of the year. It presently trades under book value and under 4x trailing PE. The dividend is backed by a payout ratio under 10% of cash flow. We recommend placing a stop-loss at $95, looking to achieve $140.50 -- upside potential over 20%. Yield 1.6%
(Analysts’ price target is $140.32)
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This company has a big market in Asia and the Asia market rolled over. A very difficult business to be in. Over the last 2 years, they were expensive. They are now coming back into that territory. You really want to buy them when they are almost bankrupt, and then you are kind of rolling the dice that they make it through. This is an extremely high quality company. He hasn’t figured out the dollar figure for an entry point yet. This would be his favourite name in this sector.