Post by
Hanalyst727 on Jun 01, 2021 7:27pm
oil and copper good analogy
yes, lumber is behaving exactly like copper back in 2006 and oil. This is what the analysts and
"institutional" investors just cant get. Of course there is also the problem that IFP has no profile and is on the TSX, not NYSE.
Lumber will now be priced on scarcity and value to end-user: for years to come. Maybe decades. Just like oil and copper are now.
Previously, lumber has basically always been priced based on cost to produce + a crappy margin. IFP is still being valued based on this regime.
Add the fact there is an ocean of timber to harvest in the US South and you have IFP able to scrape the cream off of US inflation and housing growth.
With the acquired mills and higher lumber prices, IFP could be a $150 stock a year from now.
However, IFP desperately needs to do a huge buyback (Substantial Issuer Bid). And do a second one if the first is over subscribed. Its a great, share-price and tax-friendly way to return money to shareholders + support future share price via higher EPS.
Secondly, a buyback allows shareholders who don't believe in the higher for longer thesis to sell out. Shareholder who don't tender can benefit if they are correct about price staying high. Its a win-win for both sets of shareholders.