The last year, and the last six months in particular, have been rough ones for Weyerhaeuser (WY) and other companies in the timber, lumber, OSB, and wood products space like Louisiana-Pacific (LPX), Norbord (OSB), Boise Cascade (BCC), and Canfor (OTCPK:CFPZF).
Although I’d always expected lumber and OSB prices to correct down from
above-trend levels, I didn’t expect the steep (approximately 60%)
plunge in lumber and OSB prices over the past six months, nor the
apparent topping out of housing starts below 1.5M. Add in trade and
tariff issues with China and Canada, and the situation has gotten quite
tough quite quickly.
As a company, Weyerhaeuser will
be fine. The now-former CEO did a very good job of driving operational
efficiency and I believe ongoing operational improvements are becoming a
core part of the company’s culture. I also believe Weyerhaeuser’s
high-quality timberlands will remain a solid store of value that can
support healthy tax-advantaged dividend payments into the future. It
will take time for the pricing pressures to work themselves out, but
with the yield now over 6%, patient investors may want to start taking a
look at this name.
Read more here:
Between Plunging Prices, Chronic Oversupply, And Trade Tensions, Weyerhaeuser Has Had A Tough Time
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