G&M 5 top companies benefiting from Japan
In the short term, analyst Sean Steuart says possible damage to Japanese pulp and paper mills may increase the need for imported paper and forest products from North America and other regions. In the mid to long term, the rebuilding effort is likely to benefit Western Canadian forestry companies that already export product to Japan, including lumber, logs and panels.
“We believe that the longer-term benefits associated with the rebuilding effort are more significant than any potential near-term bump in Canadian pulp and paper exports to Japan,” Mr. Steuart said in a research note.
However, the bounce in these stocks has already occurred, with shares in Canadian lumber and timber equities posting sharp gains over the past couple of days. As a result, “valuations already reflect much of the potential upside,” said Mr. Steuart.
Also, in the near term, there will likely be a reduction in demand for most forest products due to infrastructure disruptions, including to roads, ports and utilities.
As such, he’s not making any changes to earnings estimates or target prices for now, but suggests the following Canadian firms will have the most potential leverage to the Japanese rebuilding efforts: TimberWest Forest Corp. (4.70----%), Interfor Ltd. (6.40-0.10-1.54%),Western Forest Products Inc. (0.910.033.41%), Canfor Corp.(13.07-0.43-3.19%), and West Fraser Timber Co. Ltd. (52.40-0.82-1.54%).
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