Think Lumber Prices are Due for a Rebound? Consider Adding These 4 Stocks to Your Portfolio
StockNews
Published Jul 20, 2021 11:18AM ET
Updated Jul 20, 2021 12:30PM ET
Think Lumber Prices are Due for a Rebound? Consider Adding These 4 Stocks to Your Portfolio
Earlier this year, lumber prices rose to record highs on rising housing demand and supply constraints. However, prices declined significantly last month as people spent more on vacations than on building renovation projects just as lumber supplies increased with the reopening of sawmills. But since the housing boom shows no signs of fizzling, analysts expect lumber prices to rebound soon. So, we believe it's an opportune time to bet on lumber stocks West Fraser (WFG), PotlatchDeltic (NASDAQ:PCH), Boise Cascade (NYSE:BCC), and Lumber Liquidators (NYSE:LL). Let’s take a closer look at these names.The demand for lumber to renovate and improve existing homes and do-it-yourself projects increased significantly over the last year because people spent more time at home. Also, the red-hot housing market led to high demand for lumber. However, as sawmills could not operate at full capacity during the worst of the COVID-19 pandemic, supply remained under pressure, causing a spike in lumber prices. In May, lumber prices hit a $1,670.50 per thousand board feet all-time high, increasing six times from the low it hit in April 2020. However, prices declined more than 40% in June—the worst monthly decline since 1978.
As people now focus on vacations and other outdoor activities after staying indoors for more than a year, demand for home remodeling has decreased. At the same time, the reopening of sawmills has led to an increase in supply. However, since the housing boom is expected to persist, analysts expect lumber prices to normalize by year's end. Furthermore, lumber prices are still up 100% versus the spring of 2020.
Since lumber prices are expected to rebound soon, we think it could be wise to bet on fundamentally sound lumber stocks West Fraser Timber Co. Ltd. (NYSE:WFG), PotlatchDeltic Corporation (PCH), Boise Cascade Company (BCC), and Lumber Liquidators Holding Inc. (LL).
Continue reading on StockNews
Get The News You Want
Written By: StockNews
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.