RE:When to load up?I'm wondering the same thing. "When to load up?"
My thoughts.
Lumber benchmark has been excellent in Q1 but is declining slowly and will probably continue to decline into summer. The market doesn't care about last quarter, only next quarter and the ones after that. Last summer it dropped to ~500 lows. I don't know if it will this year but that would be half of where it is now and will drag on share price of all lumber companies.
Rising rates - Many banks projecting 50 basis point hikes coming now, about 200 basis points this year. Bonds have already sold off in anticipation, mortgage rates have already risen as though these hikes are as good as done.
There is a housing shortage and builders will still push to build as many as they can... last year they paused selling for a month to re-adjust prices (pump up margins). Builders may need to re-adjust margins back down to normal to keep the same pace/growth as they would with last years rates. I believe this is already being done.
My worry is that if we get to September and FED/BOC are still hawkish and that pushes rates up another 100-200 basis points beyond what is currently baked in. That will definitely cool house prices and at the very least slow building growth.
So when to buy?
Interfor and WFG (my 2 fav’s) have been losing market cap almost everyday the last month and I don’t see that trend reversing in the short term. Even though they are flush with cash, trading at multiples of less than 3x last years earnings and 3-4x 2022 earnings and are buying back stock at ridiculous rates. I feel like the sector is fighting an invisible war against the FED/BOC and they can’t win until something changes.
Things change very quickly, as fast as FED/BOC was to ratchet up rate hikes, they can turn dovish just as quick.
I think I will wait until rates stabilize or market cap drops so low that the cash on hand is just too much to let share price drop any further.
I’d be curious to know what other people think though because my minds wide open on this stuff!