3 Lumber Stocks To Buy With The Housing Market's Boom

Several sawmills were forced to shut down amid the COVID-19 pandemic because coronavirus infections and travel restrictions led to labor shortages. However, as people spent more time at home during the worst of the pandemic last year, the demand for lumber for home renovations and do-it-yourself (DIY) projects increased.

According to the National Association of Home Builders, the price of lumber and other building materials has nearly tripled over the last year. A rising demand for housing, changing lifestyle needs, and increased remote working activity should drive demand further this year.

Because the demand for lumber is expected to be significantly higher than supply in the coming months, prices are sure to go up more.  So, we think investors should bet on West Fraser Timber Co. Ltd (WFG), UFP Industries, Inc. (UFPI), and Boise Cascade, L.L.C. (BCC ) because they are likely to benefit from the rise in lumber prices. 

West Fraser Timber Co. Ltd.

Based in Vancouver, Canada, WFG is a diversified wood products company that produces lumber, laminated veneer lumber (LVL), medium-density fiberboard (MDF), plywood, pulp, and newsprint, among other products. The company operates more than 60 facilities across Canada, the United States, the United Kingdom, and Europe.

WFG’s net sales of CAD 1.70 billion for its  fiscal year 2020 fourth quarter ended December 31, 2020 represents a 49.6% year-over-year rise. Its operating earnings have increased 1761.3% year-over-year to CAD 515 million. The company’s net earnings have increased 971.4% year-over-year to CAD 366 million. Also, its EPS was  CAD 5.34 for the quarter, compared to loss per share of CAD 0.61 in the prior-year period.

Analysts expect its EPS to be $18.61 in its fiscal year 2021, which represents a 92.5% year-over-year rise. Its revenue is expected to increase 187.1% year-over-year to $2.45 billion for the quarter ended March 31, 2021.

In February, WFG completed the acquisition of Norbord Inc. And it  announced on April 6 that Norbord will redeem all its outstanding 5.75% Notes, due July 15, 2027, on May 6. Also in February, the company entered an automatic share purchase plan (ASPP) with a broker  to facilitate repurchases of its common shares under its previously announced normal course issuer bid (NCIB). The stock has gained 287.3% over the past year to close yesterday’s trading session at $82.85.

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