Lumber’s Boom-Bust Cycle Sets Producers Up for Year-End Rally
- Seasonality charts show lumber stocks gain post September drop
- Royal Bank of Canada says worst of the sector’s rout has past
This article is for subscribers only.
Plunging lumber prices may have sent shares of producers tumbling in recent weeks, but analysts and traders say that if history is any guide, stocks are set for a rebound as the homebuilding season picks up into year-end.
Over the past 20 years, lumber prices and shares of companies from West Fraser Timber Co. and Canfor Corp. to Louisiana-Pacific Corp. have tended to slump in September before rallying into the new year, according to a Bloomberg analysis of seasonality patterns. RBC Capital Markets analyst Paul Quinn says don’t expect this go-around to be any different.