Lumber Tariffs Look Likely Under Trump, but Canfor and West Fraser Remain Undervalued
Following President-elect Donald Trump's nomination of Robert Lighthizer as U.S. trade representative, stiff U.S. tariffs on Canadian lumber exports appear highly likely. Our wood product company models now assume a 20% tax on southbound Canadian lumber will be rolled out shortly. Concurrently, we've lowered our near-term forecast for U.S. housing starts, essentially deferring the cyclical peak for wood product company earnings (see our Jan. 18 note "Household Formation Lags Expectations in 2016...Canfor is an integrated forest products company with facilities in Canada and the U.S. Co. has two reportable segments: Lumber and Pulp and Paper. The Lumber segment includes logging operations, and manufacturing and sale of various grades, widths and lengths of lumber, engineered wood products, wood chips and wood pellets. The Pulp and Paper segment includes purchase of residual fibre, and production and sale of pulp and paper products, including Northern Bleached Softwood Kraft and Bleached Chemi-Thermo Mechanical Pulp as well as energy revenues.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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