New duties on Canadian exports imposed by the Trump Administration is likely to hurt the bottom lines of the Canadian lumber stocks on our list
SmallCapPower | April 27, 2017: In its latest move, the Donald Trump administration has delivered a long-awaited verdict on softwood lumber, threatening a 20% tariff on Canadian softwood exports to the United States. The statement had come after the Trump administration alleged Canadian logging companies such as West Fraser Timber (TSX: WFT) receive subsidies as high as 24.12%, which is unfair to domestic U.S. lumber companies. If such a tariff comes into play, it would likely make Canadian softwood exports less competitive in the U.S., which will likely hurt the bottom lines of Canadian lumber producers. Today we have identified five Canadian lumber stocks that are most likely to be affected negatively by the new Trump policies.
Acadian Timber Corp (TSX: ADN) – $18.05
Forest & Wood Products
Acadian Timber Corp. is a Canada-based supplier of primary forest products in Eastern Canada and the northeastern United States. The Company owns and manages approximately 761,000 acres of freehold timberlands in New Brunswick (New Brunswick Timberlands), approximately 299,000 acres of freehold timberlands in Maine (Maine Timberlands) and provides management services relating to approximately 1.3 million acres of Crown licensed timberlands. The Company operates through two segments: NB Timberlands and Maine Timberlands. The Company also owns and operates a forest nursery in Second Falls, New Brunswick. The Company’s products include softwood and hardwood saw logs, pulpwood and biomass by-products sold to approximately 100 regional customers.
- Market Cap: $302.0 million
- Total Revenue (LTM): $77.2 million
- D/E (LTM): 36.2%
- YTD Price Change: -1.6%
Canfor Corp. (TSX: CFP) – $19.61
Forest & Wood Products
Canfor Corporation is an integrated forest products company that produces softwood lumber, pulp and paper products, remanufactured lumber products, engineered wood products, wood pellets and energy. Its segments include lumber, and pulp and paper. Its lumber segment includes logging operations, and manufacturing and sale of various grades, widths and lengths of lumber, engineered wood products, wood chips and wood pellets. Its lumber operations also include a finger-joint plant, two glulam plants, a whole-log chipping plant and a trucking division. The Pulp and Paper segment consists of three northern softwood market Kraft pulp mills and the Taylor pulp mill, all of which are owned and operated by Canfor Pulp Products Inc. (CPPI) in British Columbia.
- Market Cap: $2,617.8 million
- Total Revenue (LTM): $4,293.2 million
- D/E (LTM): 32.1%
- YTD Price Change: 28.4%
Interfor Corp. (TSX: IFP) – $20.07
Forest & Wood Products
Interfor Corporation is a Canada-based lumber provider. The Company and its subsidiaries produce wood products in British Columbia, the United States Northwest and the United States South for sale to markets around the world. The Company offers a range of products, including Clear Cedar Finger Joint Bevel Siding, Clear Cedar Solid Bevel Siding, Clear Cedar V-Joint Paneling, Dimension Lumber, Elite Cedar 5/4 Radius Edge Decking, Elite Cedar V-Joint Paneling, Elite Knotty Cedar Decking, Fineline Paneling, Japan Zairai-Beams, Japan Zairai-Ground Sill, Japan Zairai-Posts, Japan Zairai-Roof Structure, Japan Zairai-Small Structural, Reserve Boards, Reserve End-Matched Paneling, Reserve Lodgepole Pine Paneling, Reserve V-Joint Decking, Special Appearance Grade Cedar Timbers, Reserve Ponderosa Pine Paneling and Studs. The Company has approximately 20 mills across North America with annual capacity of over three billion board feet.
- Market Cap: $1,412.8 million
- Total Revenue (LTM): $1,792.7 million
- D/E (LTM): 39.3%
- YTD Price Change: 33.5%
West Fraser Timber Co Ltd. (TSX: WFT) – $61.30
Forest & Wood Products
West Fraser Timber Co. Ltd. is a diversified wood products company, which produces lumber (spruce-pine-fir (SPF) and southern yellow pine (SYP)), panels (plywood, medium-density fiberboard (MDF) and laminated veneer lumber (LVL)), pulp (northern bleached softwood kraft (NBSK) and bleached chemi-thermomechanical pulp (BCTMP)), newsprint, wood chips and energy. The Company’s segments include Lumber, Panels, Pulp & Paper, and Corporate & Other. It offers engineered wood products. The Company holds rights to timber resources that for supplying the fiber required by its Canadian operations and have agreements for the supply of fiber required by its United States operations.
- Market Cap: $4,651.6 million
- Total Revenue (LTM): $4,562.0 million
- D/E (LTM): 19.1%
- YTD Price Change: 27.7%
Western Forest Products Inc. (TSX: WEF) – $2.11
Forest & Wood Products
Western Forest Products Inc. is a softwood forest products company, operating in the coastal region of British Columbia. The Company’s primary business includes timber harvesting, reforestation, forest management, sawmilling logs into lumber and wood chips, and lumber remanufacturing. The Company’s log and lumber products are sold throughout the world. Its business includes the harvesting of timber, reforestation, forest management, the manufacturing and sale of lumber and wood chips, and the sale of logs. Its Lumber by species include hemlock and balsam; douglas fir; yellow and western red cedar.
- Market Cap: $834.4 million
- Total Revenue (LTM): $187.3 million
- D/E (LTM): 6.6%
- YTD Price Change: 11.6%
Disclosure: Neither the author nor any of the principals at Small Cap Power, or their family members, own shares in any of the companies mentioned above.
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