5 Stocks To Watch As Lumber Prices Return To Pre-Pandemic Levels

Zinger Key Points
  • Lumber futures are down more than 70% from a peak in March.
  • The Russia-Ukraine war continues to create supply chain bottlenecks.

The cost of two-by-fours has returned to what it was prior to the Covid-19 pandemic construction boom as lumber prices drop to their lowest position in more than two years, signaling a significant slowdown in development.

Lumber futures rebounded from Monday lows on Wednesday, but down more than 70% from its peak in March when the Fed started hiking interest rates to combat inflation.

The pandemic greatly increased demand for suburban homes as well as home renovations. Lumber prices had tripled from pre-pandemic levels during that time, indicating an impending inflationary environment.

See Also: Potential Home Sellers Are Digging In, Holding On To Their Low Morgage Interest Rates

For the prospective buyer who has already found their dream home, mortgage lender NASB Financial Inc. NASB is offering a variety of banking products including checking, savings and certificate of deposit accounts. It is also offering mortgage and refinancing options, including self-employed mortgage options for the handyman or self-incorporated day trader. 

The Russia-Ukraine conflict and supply chain bottlenecks have further increased the price of commodities this year.

With lumber prices showing signs of easing, here are a few lumber stocks that could be interesting to add to a portfolio.

International Paper

International Paper IP, one of the largest paper producers in the world, focuses mostly on industrial packaging like cardboard, which enables the business to take advantage of the e-commerce boom. Today, industrial packaging accounts for the majority of IP's business.

The stock is down 30% year to date.

Resolute Forest Products

Market pulp, tissue, wood products, and paper are all sold by this Canadian lumber firm. Resolute Forest Products RFP is investing in emerging markets like wood goods instead of relying on dated and decreasing items like paper.

The stock is up 37% year to date.

Lumber Liquidators

By offering exposure to the need for finished wood products like flooring, Lumber Liquidators LL provides another avenue to play the lumber sector.

If you want to wager on strong demand for wood flooring but moderate timber costs, this company is an excellent investment to purchase because it benefits from lower commodity pricing.

The stock is down 58% year to date.

UFP Industries

Michigan-based UFP Industries UFPI is a multibillion-dollar holding company with subsidiaries around the globe that serve three markets: retail, industrial, and construction.

The stock is down 21% year to date.

West Fraser Timber

Diversified wood prodcuts company West Fraser Timber Co. WFG is a diversified wood products company with more than 60 facilities in Canada, the U.S, the U.K, and Europe. The company produces lumber, engineered wood, and other products including pulp, newsprint, wood chips, and renewable energy.

The stock is down 23% year to date.

See Also: Surprise! Jobless Claims Fall To Lowest Levels Since April

Image: Pixabay

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