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Earnings Play - Wood Products
Posted on 7/15/20 at 3:24 pm
Posted on 7/15/20 at 3:24 pm
I work on the retail side for a privately owned commercial lumber company in Nashville. Based on my conversations with suppliers, expect earnings for companies like Weyerhaeuser, Norbord, Boise Cascade, Bluelinx, etc. to be huge. Demand has been absolutely insane throughout the covid situation (construction is deemed essential basically everywhere) and lumber prices are astronomical at the moment (some of them are higher than I've ever seen by far). Earnings will be later this month and early in August and I think this will be a great chance to make a Q2 earnings play
Disclaimer: I have shares in Weyerhaeuser and Norbord.
Disclaimer: I have shares in Weyerhaeuser and Norbord.
7
Posted on 7/15/20 at 3:41 pm to itsbigmikey
I am close to this industry and suspect you are right. Having said that, I’m not going to try it.
Posted on 7/15/20 at 3:42 pm to itsbigmikey
Lumber prices have been really high for a couple of months now and haven't shown any signs of slowing down.
I'm honestly surprised we haven't seen more of a bounce from the major lumber players as they have to be making tons of money right now. Q2 should be better than Wall Street expectations, and I would expect forward guidance to be extremely positive. Q3 is looking very promising.
Timber prices are low right now which hurts someone like Weyerhaeuser, but the high lumber prices should more than make up from lost revenues in that segment. I'm expecting WY to be above $30/share after their earnings on 7/31.
I'm honestly surprised we haven't seen more of a bounce from the major lumber players as they have to be making tons of money right now. Q2 should be better than Wall Street expectations, and I would expect forward guidance to be extremely positive. Q3 is looking very promising.
Timber prices are low right now which hurts someone like Weyerhaeuser, but the high lumber prices should more than make up from lost revenues in that segment. I'm expecting WY to be above $30/share after their earnings on 7/31.
Posted on 7/15/20 at 3:46 pm to itsbigmikey
I really wanted to hit options harder with this play, but there aren't many lumber companies with a robust options market.
Someone let Dave Portnoy and r/wallstreetbets know about lumber prices and maybe they will juice up the options market!
Someone let Dave Portnoy and r/wallstreetbets know about lumber prices and maybe they will juice up the options market!
Posted on 7/15/20 at 3:46 pm to DumpsterFire
quote:
I'm expecting WY to be above $30/share after their earnings on 7/31
I'd agree. I really like Boise Cascade but it's just pushed so high that I'm nervous to pull the trigger. I've heard rumblings along the lines of best quarters ever for some of these companies. Whether it's true or not, I guess we'll find out
Posted on 7/15/20 at 3:51 pm to itsbigmikey
quote:
I've heard rumblings along the lines of best quarters ever for some of these companies.
I don't think Q2 will be the best quarter ever, but I could be wrong. There were lots of curtailments still going on in April and May and prices didn't really take off until May either. Q2 and Q3 of 2018 will be tough to top, but, if prices don't crash, then Q3-2020 could be a record breaker.
Posted on 7/15/20 at 4:11 pm to DumpsterFire
when does Boise report Q2?
Posted on 7/27/20 at 9:14 am to itsbigmikey
Sold some calls just now that I bought when you made this thread. WY is taking off today.
Posted on 7/27/20 at 10:11 am to RebelExpress38
quote:
Sold some calls just now that I bought when you made this thread. WY is taking off today.
Nice! I'm trying to figure out what to do myself. Up pretty big on Norbord and Bluelinx and thinking about taking some profits. I still see these things pushing until earnings next week
Posted on 7/27/20 at 10:14 am to jmcwhrter
quote:
when does Boise report Q2?
August 3rd. Gonna be huge
Posted on 7/27/20 at 10:17 am to itsbigmikey
quote:
August 3rd. Gonna be huge
Same sentiment for WY?
Posted on 7/27/20 at 11:05 am to jmcwhrter
did hear cedar continues to go up.
Posted on 7/27/20 at 12:06 pm to jmcwhrter
quote:
Same sentiment for WY?
quote:
Timber prices are low right now which hurts someone like Weyerhaeuser, but the high lumber prices should more than make up from lost revenues in that segment. I'm expecting WY to be above $30/share after their earnings on 7/31.
This is what DumpsterFire mentioned and he is right. Timbers are cheap now which is affecting their bottom line, but I think it will easily be made up for with how high lumber prices are and how crazy demand is. Plywood pricing is up ~60% from the beginning of the year and is still very firm. I don't deal directly with WY at work, but I am sourced their products regularly. I have a very bullish sentiment for their earnings.
Another potential winner is AZEK. They are a direct competitor of TREX who is going to have an unbelievable quarter as well. You can't even find their product in stock right now. Azek just IPO'd and their Timbertech line of decking is going to really help their earnings this quarter. TREX is trading around $137/share while AZEK jumped up to around $34 today.
Posted on 7/29/20 at 9:16 am to itsbigmikey
WY call options starting to see some positive movement today ahead of earnings.. Yahoo Finance ran an article this morning listing them as a potential earnings beat
Posted on 7/31/20 at 8:05 am to itsbigmikey
quote:
Weyerhaeuser (NYSE:WY): Q2 Non-GAAP EPS of $0.11 beats by $0.10; GAAP EPS of $0.10.
Revenue of $1.63B (-3.6% Y/Y) beats by $190M.
Timberlands sales of $480m vs. consensus of $368m
WY the first domino to fall, up over 2% premarket. Good sign for the others. Not sure how much is priced in but we're going to have some monster earnings out there.
Posted on 7/31/20 at 8:10 am to itsbigmikey
starting to feel like I'm going to be very disappointed in this one..
Absolutely crushed earnings AND gave strong forward guidance, but checking around the social networks that will really push price, this company is mostly ignored
Have a feeling the people that would have driven this one higher will be too busy chasing tech stocks today
Absolutely crushed earnings AND gave strong forward guidance, but checking around the social networks that will really push price, this company is mostly ignored
Have a feeling the people that would have driven this one higher will be too busy chasing tech stocks today
Posted on 7/31/20 at 8:12 am to jmcwhrter
You nailed it. Lumber isn't sexy haha
Posted on 7/31/20 at 8:12 am to itsbigmikey
In January it was trading over 31 at one point, hopefully it gets above that level today
Posted on 7/31/20 at 8:15 am to DumpsterFire
quote:
Lumber prices have been really high for a couple of months now and haven't shown any signs of slowing down. I'm honestly surprised we haven't seen more of a bounce from the major lumber players as they have to be making tons of money right now.
quote:
Timber prices are low right now
We keep hearing about the timber companies and how timber prices are very low right now but lumber is very high. Can someone explain this phenomenon to me?
Posted on 7/31/20 at 8:23 am to RebelExpress38
quote:
In January it was trading over 31 at one point, hopefully it gets above that level today
Above $31 might be enough to get a golden cross.. that would set off some bots/algos/trackers to take notice
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