CFPZF - Buy the Dip in these 3 Lumber Stocks While You Can

Lumber prices tailed off last week after a considerable increase in the preceding months. However, the cost of lumber is jumping once again. As an example, 2x4s sold this past week for a record high of $1,640 per 1k-ft. board. This price level represents a climb of 340% in the past year. It is pretty clear that Americans and others cannot get enough lumber for housing, home improvement projects, and other needs.

If you are not invested in lumber stocks, you still have time to establish a position in one or more companies in the lumber space. The gigantic millennial age cohort is spearheading the housing push, ramping up demand for lumber all the more. Millennials are the largest age cohort in the United States, meaning the demand for housing-related lumber should hold strong for at least another half-decade, if not longer.

The question is not whether lumber will be in demand for the foreseeable future. Rather, the question is which specific stocks are the best to invest in to make money from the ever-spiking demand for wood. Three of the top lumber stocks are as follows: Boise Cascade (BCC), Canfor Corporation (CFPZF), and West Fraser Timber (WFG).

Boise Cascade (BCC)

BCC is a wood manufacturer and wood products, specialist. BCC makes everything from plywood to particleboard, lumber, and other wood products. The company also distributes wood products, including EWP, lumber, and MDF products. Based in beautiful Boise, Idaho, BCC's operations extend to the United States and Canada.

BCC has an overall grade of A, which translates into a Strong Buy rating in the POWR Ratings system. The stock has grades f A in the Value and Growth components and grades of B in the Quality and Momentum components. Click here to find out how BCC fares in the Stability and Sentiment components. Of the half dozen stocks in the A-rated Industrial - Wood industry, BCC is ranked #1 overall. You can find other top stocks in this industry by clicking here. BCC has a forward P/E ratio of 5.30, a clear sign that the stock is likely undervalued. 

Note that BCC is one of the few stocks handpicked by our Chief Value Strategist, David Cohne, currently in the POWR Value portfolio. Learn more here.

Canfor Corporation (CFPZF)

CFPZF has an overall grade of A, which is a Strong Buy rating in the POWR Ratings system. The stock has B grades in the Quality, Momentum, Value, and Growth components. Click here to find out how CFPZF fares in the Sentiment and Stability components. CFPZF is ranked second of six stocks in the Industrial - Wood space. 

CFPZF enjoyed a revenue increase of 65.8% in the most recent quarter, hitting a total of $1.94B in that period. This is a massive increase in revenue and a testament to the fact that the cost of lumber is soaring as the demand for housing continues to explode. 

West Fraser Timber (WFG)

WFG, based in Vancouver, Canada, makes a wide array of wood products. The company produces lumber, wood chips, pulp, MDF, LVL, newsprint, and plywood. The company's wood-related items are primarily made and sold in the western half of Canada and the southern portion of the land of the free and the home of the brave.

WFG is ranked third in the Industrial - Wood industry. WFG has an overall grade of B, translating into a Buy rating in the POWR Ratings system. The company has a grade of B in the Quality, Momentum, Sentiment, and Growth components. If you would like to know how WFG fares in the remainder of the POWR Ratings components, such as Stability and Value, you can find out by clicking here.

Though WFG has increased in value across the prior year, there is a good argument to be made the stock is still undervalued. WFG's forward P/E ratio of 5.84 should have investors salivating. This is a low P/E ratio considering the fact that the stock is trading only $15 below its 52-week high of $91.53.

BCC shares were trading at $67.47 per share on Thursday morning, up $0.77 (+1.15%). Year-to-date, BCC has gained 41.44%, versus a 12.72% rise in the benchmark S&P 500 index during the same period.

About the Author: Patrick Ryan

Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management.

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