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Think Lumber Prices are Due for a Rebound? Consider Adding These 4 Stocks to Your Portfolio By StockNews

© Reuters. Think Lumber Prices are Due for a Rebound? Consider Adding These 4 Stocks to Your Portfolio

Earlier this year, lumber prices rose to record highs on rising housing demand and supply constraints. However, prices declined significantly last month as people spent more on vacations than on building renovation projects just as lumber supplies increased with the reopening of sawmills. But since the housing boom shows no signs of fizzling, analysts expect lumber prices to rebound soon. So, we believe it’s an opportune time to bet on lumber stocks West Fraser (WFG), PotlatchDeltic (NASDAQ:), Boise Cascade (NYSE:), and Lumber Liquidators (NYSE:). Let’s take a closer look at these names.The demand for lumber to renovate and improve existing homes and do-it-yourself projects increased significantly over the last year because people spent more time at home. Also, the red-hot housing market led to high demand for lumber. However, as sawmills could not operate at full capacity during the worst of the COVID-19 pandemic, supply remained under pressure, causing a spike in lumber prices. In May, lumber prices hit a $1,670.50 per thousand board feet all-time high, increasing six times from the low it hit in April 2020. However, prices declined more than 40% in June—the worst monthly decline since 1978.

As people now focus on vacations and other outdoor activities after staying indoors for more than a year, demand for home remodeling has decreased. At the same time, the reopening of sawmills has led to an increase in supply. However, since the housing boom is expected to persist, analysts expect lumber prices to normalize by year’s end. Furthermore, lumber prices are still up 100% versus the spring of 2020.

Since lumber prices are expected to rebound soon, we think it could be wise to bet on fundamentally sound lumber stocks West Fraser Timber Co. Ltd. (NYSE:), PotlatchDeltic Corporation (PCH), Boise Cascade Company (BCC), and Lumber Liquidators Holding Inc. (LL).

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