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Robert Green
Robert Green

Timber Stocks To Buy _HOT_

All of this has created a very bullish environment for lumber stocks. Perhaps the best part is that many analysts now predict that elevated timber prices may be here to stay. Saw mill utilization remains low, demand remains high and lumber producers aren't exactly looking to boost supplies anytime soon.

timber stocks to buy


That massive size and scope has benefited the firm throughout the recent surge in lumber prices. WY is able to harvest its own logs and turn them into usable boards. This has turned out to be a great business model during the current timber mania. WY's wood products division was responsible for roughly 80% of adjusted earnings during the first quarter. Those adjusted earnings, by the way, clocked in at a record $1.1 billion.

When it comes to major timber REITs, PotlatchDeltic (PCH (opens in new tab), $60.39) was always the small fry. That changed a few years ago when it merged with Deltic Timber into its current form. Now, it's a powerhouse when it comes to lumber.

For investors looking to get to the "meat" of rising lumber prices, it makes sense to focus on a pure producer of boards, 2x4s, framing and other actual wood products. While WY and PCH do make money from land recreation and other related businesses. UFP Industries (UFPI (opens in new tab), $79.92) is strictly a producer of timber.

Stumpage fees are the price lumberjacks pay timberland owners to harvest their land. Right now, stumpage fees are at their lowest levels since 2011. Thanks to labor storages and pandemic-induced storages, timberland owners are basically begging to get their land harvested.

Our neighbors to the north know a thing about logging, with Canada serving as a major producer of timber. For Vancouver-based West Fraser Timber (WFG (opens in new tab), $77.94) and its investors, this is a great thing.

For investors looking to be "stewards of the land," timber REIT Rayonier (RYN (opens in new tab), $38.23) could be the top choice. The difference between Rayonier and the previously mentioned Weyerhaeuser and PotlatchDeltic comes down to the business model.

Well, we're talking about a "steady" long-term lumber stock play. One of the perks of owning timberland is that it is boring: bringing in slow, steady, inflation-fighting returns. That's essentially what investors get with Rayonier. And the return comes in part from its juicy 2.8% dividend yield.

Given the wide variety of firms winning in the current lumber mania environment, investors may want to think more broadly when it comes to allocations in the sector. And thanks to the continued exchange-traded fund (ETFs) boom, there are now a few funds designed to provide that exposure to lumber stocks.

For one thing, it's not just a U.S. or North America-focused fund. There are plenty of emerging market and intentional stocks tucked within its holdings. In fact, the U.S. and Canada only make up about half of the ETF's assets. That might produce a different return profile than what investors are looking for or change asset allocation decisions.

Secondly, WOOD isn't a pure play on lumber pricing or timberlands. A huge percentage of the fund's assets are designated for paper and packaging firms like International Paper (IP (opens in new tab)) and Domtar (UFS (opens in new tab)). Pulp and paper pricing dynamics are not correlated with trends moving lumber. So, using WOOD isn't a one-for-one play. Nonetheless, the ETF does make an interesting, broad take on the lumber stock theme.

Surging demand for multi-family housing projects is spurring activity in the volatile commodities market. Lumber futures have gained roughly 5% over the past five days as of October 7. Investors that are looking to capitalize on the current housing situation can position their portfolios for a rebound. Lumber prices have close ties to the housing market and though the housing sector is being pressured by higher interest rates and mortgage rates, the rise in multi-family starts can send lumber prices higher. Investors can benefit while lumber still comes cheap by buying some of the top lumber stocks into weakness right now. Some of the best lumber stocks with positive market sentiment include UFP Industries, Inc. (NASDAQ:UFPI), Boise Cascade Company (NYSE:BCC), and Weyerhaeuser Company (NYSE:WY).

To determine the best lumber stocks to buy now, we reviewed the lumber industry and identified major players. We narrowed down our selection to profitable companies with strong balance sheets and solid free cash flows. We gave weight to analyst and investor sentiment and included stocks with positive market sentiment. Along with each stock, we have mentioned the hedge fund sentiment, analyst ratings, and salient features that make it rank among the best lumber stocks to buy now. We have arranged these stocks according to their popularity among elite hedge funds.

Stella-Jones Inc. (OTC:STLJF) is a leading North American producer of wood products. On September 15, Stella-Jones Inc. (OTC:STLJF) announced that it will be acquiring Texas Electric's wood utility pole manufacturing business for $28 million and also $4 million worth of inventories. The transaction is expected to close by the end of 2022. The stock is one of the best lumber stocks to invest in right now.

On August 10, Stella-Jones Inc. (OTC:STLJF) announced earnings for the second quarter of 2022. The company reported earnings per share of $1.51 and generated a revenue of $907 million, beating Wall Street estimates by $238.39 million. As of October 7, the stock is trading at a PE multiple of 13x and is offering a forward dividend yield of 2.03%. The company has free cash flows of $235 million and is one of the best cash-rich lumber stocks to buy now.

Interfor Corporation (OTC:IFSPF) is cash rich and profitable. The company has trailing twelve-month cash flows of $734.6 million and an operating margin of 28.4%. Over the past three months, the stock has received 3 Buy ratings and 1 Hold rating from Wall Street analysts and has a consensus Strong Buy rating. Interfor Corporation (OTC:IFSPF) is one of the best lumber stocks to buy now.

This July, TD Securities analyst Sean Steuart raised his price target on West Fraser Timber Co. Ltd. (NYSE:WFG) to $120 from $105 and reiterated a Buy rating on the shares. Over the past three months, West Fraser Timber Co. Ltd. (NYSE:WFG) has received 3 Buy ratings from Wall Street analysts and has a consensus Strong Buy rating. The stock has an average price target of $102, which represents an upside of 42%. West Fraser Timber Co. Ltd. (NYSE:WFG) is one of the best lumber stocks to buy now.

Resolute Forest Products Inc. (NYSE:RFP) operates in the forest products industry in the United States, Canada, Mexico, and international markets. The company has four business divisions: Market Pulp, Tissue, Wood Products, and Paper. As of October 7, Resolute Forest Products Inc. (NYSE:RFP) has gained 46.5% over the past twelve months and is one of the best lumber stocks to buy now.

Rayonier Inc. (NYSE:RYN) is a specialized REIT that manages assets that are rich in lumber and timber. On August 3, Rayonier Inc. (NYSE:RYN) announced market-beating earnings for the second quarter of 2022. The company reported earnings per share of $0.22 and outperformed estimates by $0.06. The company generated a revenue of $246.3 million and beat Wall Street consensus by $30.79 million.

Rayonier Inc. (NYSE:RYN) pays dividends and is cash-rich and profitable. As of October 7, the stock is offering a forward dividend yield of 3.62% and the company has free cash flows of $104.48 million and a trailing twelve-month operating margin of 20.8%. Rayonier Inc. (NYSE:RYN) is one of the best lumber stocks to buy now.

For investors that are on the lookout for lumber stocks, some of the best pure-play lumber stocks to invest in right now include UFP Industries, Inc. (NASDAQ:UFPI), Boise Cascade Company (NYSE:BCC), and Weyerhaeuser Company (NYSE:WY).

In this article, we discuss the 10 best lumber stocks to buy now. If you want to skip our detailed analysis of these stocks, go directly to the 5 Best Lumber Stocks to Buy Now.

In late May, the United States Census Bureau released the sales numbers for new residential units sold across the country, reporting that sales stood at 863,000 in April, a 48% increase from the estimated sales of houses in April 2020, but just below the 917,000 units sold in March. All indicators point to an increase in growth for housing in the coming months, lending credence to bull predictions for lumber stocks. Forestry information firm Forest Economic Advisors LLC expects lumber firms will extend price gains through the year as demand outstrips production.

Some of the stocks that stand to benefit from this boom include Rayonier Inc. (NYSE: RYN), Boise Cascade Company (NYSE: BCC), and UFP Industries, Inc. (NASDAQ: UFPI), among other lumber stocks. Rayonier Inc. (NYSE: RYN), Boise Cascade Company (NYSE: BCC), and UFP Industries, Inc. (NASDAQ: UFPI) stocks have all hit 52-week highs in recent weeks but taken a breather since then as market analysts expect plywood import and ramped up production to have an overall chain reaction on the housing sector.

However, the strong demand for new houses, driven by millennials, who made up the largest share of home-buyers in the US in 2020, and an overall increase in the median income for first-time buyers, which rose to $80,000 in 2020 from $68,000 in 2019, is likely to sustain the new lumber prices this year. It would be quite fair to say that lumber prices have returned as much to investors as other high growth stocks in recent months, rivalling crypto and uranium stock rallies, with future outlook looking decidedly bullish.

Resolute Forest Products Inc. (NYSE: RFP) is a Canada-based pulp and paper maker founded in 2007. It is placed tenth on our list of 10 best lumber stocks to buy now. The stock has offered investors returns exceeding 505% over the course of the past twelve months. The company makes and sells lumber products in Canada, Mexico, and the United States, among other countries. Some of the products the firm markets include paper, tissue, wood products, and market pulp. 041b061a72


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