WFG - Interfor: Not The Lowest Cost Assets
2024-03-22 14:56:17 ET
Summary
- Interfor is running less profitably than some close peers, which is an issue when industry profits are highly pressured and in negative territory.
- There will be more marginal mills out there, so we're not too worried about Interfor, but we see potential supply issues on the horizon from Europe.
- Also, we are not yet ready to bet on a sustained upswing in housing starts and want to see what happens with maturity walls.
- Interfor trades more cyclically than WFG, and the distress discount is present at the moment, requiring real estate upturns to dissipate.
- In those trading dynamics, where we don't want to bet quite yet on housing starts, we are staying away.