TThe boom in the US real estate market is not only helping home builders, but the lumber industry as well. In addition, the shortage of wood due to the growing demand for new housing is also pushing up prices.
Needless to say, the Zacks Construction products – Wood the industry is expected to benefit in the days to come as more people build homes and repair and renovation activities gain momentum.
Residential construction market serving the wood industry
A number of factors have helped the lumber industry in the United States for quite some time. One of the main factors is the resilience of the residential construction market. Since the economy reopened, the residential construction market has been in the throes of a tear with growing demand for new housing.
Record mortgage rates have led people to buy new homes. At the same time, it helps the timber industry. Wood as a construction product is an integral part of the residential construction industry.
The Commerce Department said last month that sales of new single-family homes rose 1.6% in December to a seasonal annual rate of 842,000 units. Year over year, new home sales increased 15.2%, with sales totaling 811,000 units in 2020, marking an increase of 18.8% from the previous year and reaching the highest level for over a decade. This is a clear indication of the boom in the residential construction market.
The wood industry on the way to growth
In addition to solid growth in the residential construction market, the lumber industry is also benefiting from a thriving repair and renovation market. Despite the uncertainties associated with the COVID-19 pandemic, the repair and renovation market is doing well, increasing the demand for lumber.
Demand for housing has seen a shortage of lumber supply, pushing prices even higher. Soaring lumber prices are pushing up new home prices, according to the National Association of Home Builders. By a report in World Property Journal citing Random Lengths, lumber prices have risen to an all-time high last week. The price of lumber has increased by over 170% in the past 10 months. This once again shows the strength of the lumber industry.
Our choices
Given the booming residential construction market and a strong repair and renovation market, the demand for lumber will continue to increase, regardless of the rising cost. It therefore makes sense to invest in stocks in the timber industry now.
LouisianaPacific Corporation LPX is a leading manufacturer of quality, durable engineered wood building materials, structural framing products, and exterior cladding for residential, industrial and light commercial construction.
The company’s expected profit growth rate for the current year is over 100%. Zacks’ consensus estimate for current year earnings has improved 4.4% in the past 60 days. LouisianaPacific sports a Rank 1 of Zacks (strong buy). You can see The full list of today’s Zacks # 1 Rank stocks here.
Potlatch Society PCH, a leader in certified forest practices, is committed to providing superior returns to shareholders through long-term management of its forest resources.
The company’s expected profit growth rate for the current year is 10.5%. Zacks’ consensus estimate for current year earnings has improved 94.6% in the past 60 days. Potlatch Corporation boasts a rank of Zacks # 1.
Weyerhaeuser Company WY is a leading US forest products companies with operations primarily focused in Southern California, Nevada, Washington, Texas, Maryland and Virginia.
The company’s expected profit growth rate for the current year is 28.7%. Zacks’ consensus estimate for current year earnings has improved 76.6% in the past 60 days. Weyerhaeuser Company has a Zacks # 1 rank.
International Masonite Society DOOR is a designer and manufacturer of interior and exterior doors. It offers molded, flush, jamb and track residential doors, louvered and specially commissioned commercial and architectural doors, as well as steel, fiberglass, wood exterior residential doors and entry systems.
The company’s expected profit growth rate for the current year is 65%. Zacks’ consensus estimate for current year earnings has improved 0.67% in the past 60 days. Masonite International wears a Zacks Rank # 2 (Buy).
Boise Cascade, LLC BCC manufactures engineered wood products, plywood, lumber and particle board and distributes a variety of wood products.
The company’s expected profit growth rate for the current year is over 100%. Zacks’ consensus estimate for current year earnings has improved 4.1% in the past 60 days. Boise Cascade has a Zacks Rank # 2.
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