The Panic-Proof Portfolio (Stockchase Research)West Fraser TimberWFG.TOPAST TOP PICKMar 23, 2023

Seasonality component akin to home building sector. Not a good time from a seasonality perspective to own stock. Would wait to buy in the spring. Trading at 1x book value which is good. Would wait for further weakness in share price before buying. 

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.

Depends on the price of timber which soared during Covid, then plunged, but is now reasonable. WFG will benefit if there's a housing boom. Don't trade this, but buy and hold it.

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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Still likes it a lot. It's spent a year in a sideways trading range. 

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%.