Canadian Money Forum banner

1 - 20 of 88 Posts

·
Registered
Joined
·
1,250 Posts
Discussion Starter #1 (Edited)
I've had this one on my radar for the past while and was waiting for the Q3 results. I know another member on this board was buying back in 1.3X range. Curious to see what others thought of the results. Lots of commentary about safety and operational changes as well as a recap of the corporate restructuring. 17% increase in sales on less volume due to commodity price. EPS of .04 leaves a payout ratio of 50% seems reasonable. High free cash flow, a dividend and share buybacks are what drew my attention to this stock originally. Thoughts and insight appreciated.

http://web.tmxmoney.com/article.php?newsid=63648791&qm_symbol=WEF

Cheers
 

·
Registered
Joined
·
5,841 Posts
I've had this one on my radar for the past while and was waiting for the Q3 results. I know another member on this board was buying back in 1.3X range. Curious to see what others thought of the results. Lots of commentary about safety and operational changes as well as a recap of the corporate restructuring. 17% increase in sales on less volume due to commodity price. EPS of .04 leaves a payout ratio of 50% seems reasonable. High free cash flow, a dividend and share buybacks are what drew my attention to this stock originally. Thoughts and insight appreciated.

http://web.tmxmoney.com/article.php?newsid=63648791&qm_symbol=WEF

Cheers
I'm long WFT, smaller dividend, but I think it's a better company.
WFT & CF are bigger with better US exposure, which depending on your POV is a plus or a minus.
 

·
Registered
Joined
·
15,839 Posts
london i don't have any insight & probably not much in the way of thoughts ... but i did own western forest for more than a year ... sold it around 1.51 after they announced the recent share buyback but only because the stochs & charts were suggesting a non-directional period coming up.

as i recall, this company primarily sells lumber product to the japanese construction industry; company is majority owned by brookfield asset management or brookfield capital (so hard to keep all the brookfields apart.)

as u know there are others in cmf who are deeply knowledgeable in the forest products sector; hopefully one will pass by & leave a comment or 2. In the meantime, another nice offering from londoncalling.
 

·
Registered
Joined
·
1,250 Posts
Discussion Starter #4 (Edited)
Thanks for the replies. WFT is fine but I am looking for something a little less popular which may mean a little more risky. Should have added a lumber stock a couple years ago but was just starting investing then and didn't quite know what I was doing. I still have a lot to learn and a ways to go but I keep reading and learning as days go by.

As always I am amazed how you seem to know a little something about almost every stock that gets a thread HP. Aside from being a journeyman carpenter and a contractor in a prior stage of life I know zero about the forest industry which may be why it's taken me so long to enter into this sector. I am not sure if the recent run up is just the beginning, or if it will peter out in the short term. Seasonally lumber is enter a period of strength. The PE is/was recently under 10 which bodes well with me. May have to listen to today's conference call to see if I can find some more info until a resident cmf expert sheds further light.

In regard to being another nice offering this remains to be seen. Only time will tell. I think the sector has some room to go just a question of when and how it will unfold.

Cheers
 

·
Registered
Joined
·
1,250 Posts
Discussion Starter #5
CEO was on BNN this week to explain and update their operations as he tries to acquire more attention/$ to this company. It is nearing 52 week highs and I have seen it go up 18c since I start seriously considering a position. Oh investor psyche is playing tricks with me.

Cheers
 

·
Registered
Joined
·
4,356 Posts
Although I have enjoyed the ride I think WEF has a longer ride in store for 2014. Dumping their pulp liabilities was the smartest thing they did...borrowing to upgrade their manufacturing is #2.
 

·
Registered
Joined
·
237 Posts
I love the P/E below 10. But that raises my biggest question... why is the P/E below 10? I own Weyerhauser (WY:US) and have done great on it. Their P/E is nearly 30. P/E of WFT is ~17. So what's kept investors away from this name? There is a risk here that hasn't been identified that doesn't exist in the other names... What is it?
 

·
Registered
Joined
·
630 Posts
I love the P/E below 10. But that raises my biggest question... why is the P/E below 10? I own Weyerhauser (WY:US) and have done great on it. Their P/E is nearly 30. P/E of WFT is ~17. So what's kept investors away from this name? There is a risk here that hasn't been identified that doesn't exist in the other names... What is it?
I looked into this one before. The reason i stayed away is that their infrastructure is at the end of its life. They are running on the high of the price of lumber but i think it will be their last hurray. hence the dividend as well.
no buyout possible, no future growth.

just my opinion of course but that is why i wouldnt buy in.
 

·
Registered
Joined
·
4,356 Posts
The way I see it sawmills are like gold mines...both are pretty worthless unless located on good ground. The West coast of BC has the largest logs and fasted growing commercial white wood in the world. They have good ground.
They are an in progress turn around story....lots of risk.
 

·
Registered
Joined
·
15,839 Posts
what had been keeping me away from western forest products were the terrible stories about the pine beetle. Entire forests & mountainsides laid waste.

at one point i read about engineered lumbers being built out of weakened, beetle-diseased timber. This truly horrified me.

everywhere you go in canada, in just about every town & city, you can find buildings pre-dating WW II whose beams & joists are made out of magnificent, knot-free Douglas fir. The grade known as "clear." It's sad that we are never going to find such timbers again.

some old beams are being carefully salvaged from tear-downs & recycled - a douglas firm beam in good condition can easily last a century or two if protected - but otherwise the douglas beams one can find in lumber yards these days are knotty, bent, often split & rarely more than 6 or 7 metres in length.

of course, this lament has nothing to do with any particular stock. It just has to do with mourning the passing of 2 centuries of magnificent old-growth timber.
 

·
Registered
Joined
·
630 Posts
some old beams are being carefully salvaged from tear-downs & recycled - a douglas firm beam in good condition can easily last a century or two if protected - but otherwise the douglas beams one can find in lumber yards these days are knotty, bent, often split & rarely more than 6 or 7 metres in length.
I agree. Douglas fir is one of the most beautiful woods out there with its red tinge.

I used to work with big douglas fir doing timber frame buildings. And it was amazing to get 26' long 12" x12" timbers that are straight as an arrow.
Here is a building we built in okotoks, that used those big timbers.
They were standing dead trees that were killed by a fire 5 years previous.
876734_63_b.jpg
 

·
Registered
Joined
·
4,356 Posts
There is no pine beetle problem thankfully on the West coast of BC or the islands..no pine trees. It has been a tragedy that continues today with no real solution.

http://nwcoastenergynews.com/wp-content/uploads/2012/12/BCpinekillmap.jpg

Large clear fir cants and prime logs generally are sold to Asia where they command premium prices..(kind of like our tuna) but are available in Canada if you can afford it, several custom sawmills exist in Southern Alberta that can supply these.
 

·
Registered
Joined
·
97 Posts
As Eder mentioned, mountain pine beetle doesn't really affect western as their forests aren't pine and therefore their wood products are different than say CF or WFT. Second and third growth Douglas fir stands can have large diameter relatively clean bottom logs that go to Japan, another large diameter rough log for china, and then an assorted mix of logs… at 85 years age. This is pretty sustainable wood fibre we're talking about too.

Now as far as western goes, they are scattered on the west coast in different forest types but have high value helicopter wood projects underway and a massive amount of high value wood planned in one of their operating areas. So if you think high quality export lumber prices are going up, they will make a lot of money. If you think cheaper wood higher volume is going to be more profitable then you look at NBD, WFT, CF etc.

I own NBD and will hold for the foreseeable future.
I will purchase western sooner rather than later.
 

·
Registered
Joined
·
1,250 Posts
Discussion Starter #16
For me today was sooner. I think this company has great long term prospects. I have been pouring over their numbers, properties as well as interviews and media releases. Today's entry price was higher than I originally hoped but I only took a nibble. I don't believe it will return to where it was a few months ago so I needed to reconsider what I felt was an acceptable price. Still got a bid in at a much lower price for a much larger tranche.

Cheers
 

·
Registered
Joined
·
5,739 Posts
Is this small cap stock a good long-term buy still? I'm looking for an (affordable) stock in this sector to keep for at least the next 3 or 5 years.
 

·
Registered
Joined
·
5,739 Posts
Norm has it as an all star for moneysense 2015 top 200. I have a position and will be holding for a year.
... good to know ... I'll keep my eyes open for a buying opportunity. Thanks for the response. :)
 
1 - 20 of 88 Posts
Top