Lumber and wood are materials that have served humanity literally since the dawn of mankind. This resource is so ingrained into our day-to-day lives that it's inconceivable living in a world without it. This means that lumber is one such natural resource that is an essential commodity.
As an investor, investing in the things people cannot live without is a sure way to guarantee your earnings almost perpetually. These materials are not in demand by the market and the only stopping you from capitalizing on it is investments in the right companies.
But with the economy recovering and set to make a booming comeback, which companies stand out among the sea of lumber companies as the most optimal ones to invest in? What should you know about them and their operations before tying up your money into their stocks?
The 10 Best Lumber Stocks To Buy Right Now
For your convenience, we have compiled and condensed all that into a list of the 10 best stocks to invest in this year:
1. Resolute Forest Products Inc. (NYSE: RFP)
Market Value: $1.01 Billion
This company is a pulp and paper maker with a track record that goes back to 2007 when it was founded. Relatively new compared to the other more storied companies in this list but its relative freshness is made up by the fact that it has offered investors a return of 505% in the past 12 months alone.
The company produces and sells lumber in Canada (also where it's based), Mexica, the US, and other countries. It also produces market pulp, paper, tissue, wood products, and other related items.
On June 10 alone, the company announced a dividend of $1 per share and plans to expand operations by $50 million. All these indicate to investors the worthiness of the company to invest and, capitalizing now on RFP stocks will put you in a position to reap the benefits of their growth.
The revenue of the company has grown by 26% amounting to $873 million as reported just this last quarter. There are currently 16 hedge funds investing in the company.
2. West Fraser Timber Co. Ltd. (NYSE: WFG)
Market Value: $10.88 Billion
One of the older lumber companies in the Americas, WFG was founded in 1955 and has a diversified portfolio of operations which include the making of lumber, panel, pulp, paper, and other wood-related items.
Over the past 12 months, the company has provided investors with a return of more than 121% and a revenue of $2.3 billion, up 162% from the previous year. The company operates in Canada where it is based but has facilities in the US, Mexico, South America, Europe, and Asia.
Recent weeks have seen the value of WFG stocks lower though but analysts state that this will rebound as home-building and improvement increases in the demand for wood products. By the end of the first quarter of this year, there were 25 hedge funds with investments in WFG amounting to over $580 million.
3. Louisiana-Pacific Corporation (NYSE: LPX)
Market Value: $6.12 Million
Based in Nashville, the company was founded in 1973. One of the reasons the stocks of this company are in such high regard in the market right now is due to investors seeing over 132% of returns over the last 12 years alone.
The company makes and sells products for home construction, repair, and remodeling, as well as outdoor markets. These products are mainly sold in the United States, South America, Asia, Europe, and Australia. Another main attraction for investors is the regular dividend that the company pays its shareholders.
In the last quarter alone, the company has gained $1 billion in revenue which is an increase of 70% year on year.
There are over 30 hedge funds currently investing in LPX with Australian-based Platinum Management Assets holding the largest share at $237 million.
4. Weyerhaeuser Company (NYSE: WY)
Market Value: $26.84 Billion
Over a hundred years old, WY is a Washington-based real-estate management company that oversees timberlands. The company has provided investors with over 49% returns on their investment in the last 12 months.
In the first quarter of 2021, the company also posted a revenue gain of $2.5 billion which is up by 45% year on year but missed their expectations by 60%. The company has also announced a quarterly dividend of $0.17 per share and has a forwards yield of 1.78%
There are currently 38 hedge funds investing in WY with the largest shareholder being First Eagle Investment Management. They have several shares worth more than $681 million.
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5. PotlatchDeltic Corporation (NASDAQ: PCH)
Market Value: $3.69 Billion
PCH is another one of those very old companies with a history that goes directly into its profitability. The company was founded in 1903 and currently possesses more than 2 million acres worth of woodlands spread out across 5 states. Apart from selling wood products, the company also engages in mining and leasing.
Revenues for the first quarter of 2021 were at an increase of 70% year on year. This amounts to more than $354 million and beat their own forecasts by more than $13 million.
The company also has the reputation of being one of the best dividend stocks in its market and has recently announced a quarterly dividend of $0.46 per share. A purchase of well-known dividend stocks provides the investor with some source of passive and stable income in the face of such volatile market conditions as we have today.
There are currently 26 hedge funds investing in the company with holdings amounting to roughly $152 million. This is an increase from last year's numbers where there were 23 hedge funds tied to the company.
6. UFP Industries, Inc. (NASDAQ: UFPI)
Market Value: $4.54 Billion
A Michigan-based company, it has garnered investors over 50% of returns on investment in the past year alone. The company was founded in 1955 and has since grown to be a global seller of wood products to 5 of the 7 continents.
The main products it markets include gardening equipment, outdoor living products, and engineered wood just to name a few. They have posted a revenue gain of almost $2 billion, up by 77% percent year to year.
The firm has also raised its quarterly dividends by 20%. There are currently 16 hedge funds investing in the company with a total worth of more than $170 million. This is down though from the previous year's 19 hedge funds.
7. Boise Cascade Company (NYSE: BCC)
Market Value: $2.31 Billion
The Idaho-based company has, in the first quarter of this year, posted a revenue of $1.8 billion which is up 55% year on year. This has provided investors with as much as 71% of returns on their investment over the past year alone.
The products sported by BCC include wood for the construction of homes, repair or remodeling, as well as light commercial and industrial purposes.
There are currently 16 hedge funds currently investing in the company with Royce & Associates leading as the largest shareholder at $12.2 million.
8. Rayonier Inc. (NYSE: RYN)
Market Value: $5.31 Billion
The company is based in Florida but has operations all over the United States and New Zealand. Apart from wood and lumber, the company also has interests in real estate -- providing for a rather large portfolio of investments.
Over the past 12 months, the company has given its investors a return of investment of over 43%. In the first quarter of this year, it has reported a revenue of $180 million which brings it up by 25% year on year.
Out of the 18 hedge funds currently tied up in the company, Impax Asset Management holds the largest share with $287 million.
9. Enviva Partners, LP (NYSE: EVA)
Market Value: $2.14 Billion
Another relative newcomer to the lumber industry, EVA has made a name for itself selling sustainable wood pellets as an alternative to coal. Founded in 2004, the company has since gone on to make waves in the market and provided its investors with a 43% return on investment this past year alone.
The revenue over the first quarter of 2021 was at $241 million, up by 18%. The quarterly dividend per share is $0.785 per share. There are also currently 7 hedge funds with investments amounting to more than $250 million. This is down though from last year's 9 hedge funds.
10. DIRTT Environmental Solutions Ltd. (NASDAQ: DRTT)
Market Value: 443.29 Million
The relatively new Canada-based company has given investors over 140% return on their investment and has a revenue of $30 million in the first quarter of 2021.
Though the profits aren't as large as the other ones in this list, the company's main attraction is its potential growth in both lumber and home technology. They provide interior construction solutions for walls, ceilings, and floors, among others.
There are currently 4 hedge funds investing in the company with a total worth of $51 million.
Bottom Line
There are more lumber stocks out there and they each have their own set of pros and cons. Like with any investment, the name of the game is research and due diligence.
Anything short of knowing what you're in for puts you at risk. Lumber stocks are always great, but the mind of a wise investor is certainly a necessity to truly be successful.
