Recipes and Analysts

After reaching skyward over the past two years, lumber stocks are suddenly getting (ahem) nailed, begins this report in the Edmonton Journal. The report goes on to accurately explain “the recipe for real pain”:

“First, the harshest winter weather in a century slammed parts of the U.S. Midwest and Northeast, cutting into construction activity. Second, a nasty six-week strike at Port Metro Vancouver, on top of ongoing railcar shortages in Western Canada, slashed some lumber producers’ shipments by double digits. Third, investors are rattled by growing talk that the U.S. housing rebound could stall, as home prices pick up and U.S. mortgage rates rise.”

I had an opportunity to talk with Mark Kennedy at CIBC yesterday. Mark said it was “too early to tell” if winter’s bite will see U.S. housing starts fall short of his 1.1 million forecast. Mark is quoted throughout the article, noting that 1.1 million starts is still 25% below the long term average. He suggests current weakness is a buying opportunity. Many will be looking forward to hearing Daryl Swetlishoff’s outlook this afternoon at the NAWLA Regional Meeting here in Vancouver. Well-known in industry circles, the Senior Managing Director, Equity Reseach at Raymond James is author of The Peak Lumber Theory and Super Cycle Thesis, published March 29. 2010.

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