News this AM -- rumored 3 Trillion infrastructure packageThe context in the news I saw was "this is going to goose Bitcoin!"
https://finance.yahoo.com/news/why-joe-biden-3t-stimulus-130539162.html
I agree, but it's seminal for wood. Even just concrete forming -- that alone drove the China wood consumption of the past decade which spared us from the worst of the NA housing implosion.
I commented on this a few days ago, thinking it was a $1T package from what I'd heard in the summer. Man. 3x more is huge. The US needs it.
This alone could double the equity value of the lumber players. The issue is we were already poised to double so it'll amplify the effects. When I say "double" I mean a WFT or OSB or LPX -- someone already trading at a fair multiple like 7x or 8x. The asymmetric opportunity is with the hated, beaten down names -- like this.
Or in more plain language, what if we have lumber in the range of USD $700 to $1000 for many years due to macro stuff like this?
Well, CFF will be privitized or sold certainly. Barring ineptitude from Ken that is. If we had 3 years of $800 lumber on average, that would see the Mack mill doing margins of $450 or so. $108M earnings a year.
What kind of equity name could be poised to earn ~$350M USD or $562M CAD over the next three years.... and how come I can buy it for a current capitalization of $68M Canadian?
We know the market is inefficient, but granted you don't find a lot of $20 bills on the sidewalk. When the money flows in it's like to move quickly.