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3 Stocks to Buy as Lumber Prices Rebound

Published 12/17/2021, 10:27 AM
Updated 12/17/2021, 11:31 AM
© Reuters.  3 Stocks to Buy as Lumber Prices Rebound

© Reuters. 3 Stocks to Buy as Lumber Prices Rebound

Due to increasing demand and supply chain issues, lumber prices are expected to continue climbing. Given this backdrop, we think it could be wise to bet on quality lumber-related stocks Weyerhaeuser (WY), UFP Industries (UFPI), and Boise Cascade (NYSE:BCC). Read on.Lumber prices fell from $1,515 per thousand board feet in May 2021 to $389 per thousand in August 2021. However, a demand-supply imbalance has caused lumber prices to rebound. According to a Bloomberg report, lumber futures on the Chicago Mercantile Exchange surged 4.4% to a six-month high of $1,069.30 per 1,000 board feet on December 10.

According to the Commerce Department data, housing starts increased 11.8% to a seasonally adjusted annual rate of 1.679 million units last month, the highest rate since March. So, the demand for lumber is expected to increase amid a surge in homebuilding. However, a bad wildfire season in the U.S. Pacific Northwest and British Columbia, and Western Canadian flooding, continues to impact lumber supply. So, lumber prices could continue their ascent. According to Richard Fung, a custom home builder with Forever Homes, “Lumber prices are expected to rise in the next year, and if this fluctuation of high prices continues, the price will have tripled by 2025.”

Therefore, we think it could be wise to scoop up the shares of fundamentally sound lumber-related stocks Weyerhaeuser Company (NYSE:WY), UFP Industries, Inc. (UFPI), and Boise Cascade Company (BCC). They are well-positioned to take advantage of the rising lumber prices.

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