The TSX lumber stocks we have identified today have shown impressive growth and strong profitability ratios
SmallCapPower | July 18, 2018: The Canadian lumber market has seen some volatility over the past year, driven by the NAFTA negotiations and environmental regulation changes. Some producers have achieved extraordinary returns over that period, expanding operations and growing their margins, while others have refrained from capital expenditures. Our list today includes three TSX lumber stocks with impressive YTD returns and industry-high ROE and ROA estimates.
Norbord is a Canada-based producer of panelboards and related products used in the construction of new homes or the renovation and repair of existing structures. Its geographic segments include North America and Europe. It also produces oriented strand board (OSB), and manufactures particleboard, medium density fiberboard (MDF) and related value-added products. In North America, the Company owns 10 OSB production facilities located in the Southern region of the United States, Western Canada, Quebec, Ontario and Minnesota. In Europe, it operates an OSB production facility, two particleboard mills and one MDF mill in the United Kingdom and one OSB production facility in Belgium. Its products are sold in North America under brand names, including SolarBord, TruDeck and StableDeck.
- Market Cap: $4,655.8 Million
- YTD Total Return: 30.9%
- Return on Equity Expected 2019: 43.7%
- Return on Assets Expected 2019: 23.1%
Canfor Corp. (TSX:CFP) – $32.29
Forest & Wood Products
Canfor Corporation is an integrated forest products company, producing softwood lumber, pulp and paper products, remanufactured lumber products, engineered wood products, wood pellets and energy. The Company operates 24 saw mills, 1 green energy plant and 4 pulp mills. It has a lumber capacity of 5.5B board feet and a pulp/paper capacity of 1.5M tonnes. The majority of its sales are to companies in the United States and Asia.
- Market Cap: $4,095.4 Million
- YTD Total Return: 30.3%
- Return on Equity Expected 2019: 20.8%
- Return on Assets Expected 2019: 10.9%
West Fraser Timber Co Ltd. (TSX:WFT) – $93.49
Forest & Wood Products
West Fraser Timber Co. is a diversified wood products company, producing 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. It operates 34 lumber mills, 7 panel mills and 5 pulp/paper mills. West Fraser Timber’s total lumber capacity is 7.2B board feet.
- Market Cap: $6,909.1 Million
- YTD Total Return: 20.9%
- Return on Equity Expected 2019: 19.5%
- Return on Assets Expected 2019: 12.2%
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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