Interfor Corp T.IFP

Ink Research

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Morning Report: Interfor insiders lumber through the market storm

May 19, 2022

Lumber prices have been falling hard with futures prices off about 25% over the past week. That has dragged down Interfor (IFP) stock in the process. On Wednesday alone, the stock fell 9.9%. Insiders are seeing the selling storm as a buying opportunity. Interfor produces wood products in British Columbia, and in the Northwest and South of the USA for sale to markets around the world.

Bearish housing narratives are not hard to find. On Wednesday's Real Vision Daily Briefing (free on INK Ultra Money) Michael Gayed, CIO and portfolio manager at Toroso Investments and author of the Lead Lag Report, outlined his bearish take on the situation. For its part, when Interfor released Q1 results on May 11th, they said, "North American lumber markets over the near term are expected to remain above historical trends driven by continued strong demand from new housing starts and repair and remodel activity, albeit with volatility." They also remain upbeat for the medium term but acknowledge that there is a potential for elevated interest rates which could slow lumber demand. Certainly, the company has benefited from demand since the pandemic started. According to Refinitiv, EPS for the 12 months ended March 2022 was $15.28, up from $8.09 a year earlier. While investors have been selling since the Q1 report on worries that the good times are over, insiders have been taking the opposite side and buying. On Wednesday the stock sank below its 200-day moving average ($33.73) to close at $31.45 which is also below the lower bound of its Bollinger Band ($32.67).