Today’s Featured Stock
Valued at $5.4 billion, West Fraser Timber (WFG) is a premier North American diversified wood products giant engaged in the harvesting, manufacturing, and marketing of lumber, panels, pulp, and paper. The materials giant operates a highly automated, cost-efficient network of production centers across western Canada and the southern United States to secure steady cash flows. This is a Vancouver-based company which trades in the U.S. stock market.
What I’m Watching
I found today’s Chart of the Day by using Barchart’s powerful screening functions to sort for stocks with notably improving technicals, a combination of momentum, strength, and direction. I then used Barchart’s Flipcharts feature to review the charts for timely opportunities. WFG checks those boxes.
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WFG has staged a timely technical turnaround, springing decisively from its multi-month cycle bottom around $58-$60. Its 20-day exponential moving average just resolved a temporary point of indecision, transitioning into a support launchpad around $66 a share. The Price Oscillator (PPO) is showcasing a highly constructive layout, carving out an upward sloping crossover on expanding institutional block trading volume. Following a deep industry consolidation cycle, this clean visual breakout appears to confirm that selling exhaustion is fully behind WFG.
www.barchart.comBarchart Technical Indicators for West Fraser Timber
Editor’s Note: The technical indicators below are updated live during the session every 20 minutes and can therefore change each day as the market fluctuates. The indicator numbers shown below therefore may not match what you see live on the Barchart.com website when you read this report.
56% Buy Barchart Opinion: More significantly, it was 8% BUY last week, and 100% SELL last month. This reminds us of the technical “darkest before dawn” scenario I see play out all the time. So when that indicator is in the basement, it might mean to avoid it for now. But it also means that when it starts to lift off of that point, it merits monitoring. Trend Seeker Status: The system established a fresh Buy signal back on May 28. That’s a bit early for a risk-averse trader like me, but it shows that indicator living up to its name, seeking trends as they change. The next logical upside target is around $75. However, that’s the “ante” to be in this one. It is the move beyond that, potentially back to the all-time high of $100 a share, that intrigues me here. One step at a time, however.Don’t Forget the Fundamentals
$5.4 billion market capitalization. Debt-equity ratio of just 0.09x. 5-year revenue growth of 25% annualized, while the stock is about flat during that time. This reflects sustained negative sentiment in this market segment, which might finally be changing for the better. 0.99 60-month beta, indicating a volatility level about equal to the S&P 500 Index.Analyst and Investor Sentiment on WFG
Wall Street Analysts: A consensus of seven analysts surveyed by Barchart rate WFG a “Moderate Buy,” including three “Strong Buy” ratings. Part of the appeal of a smaller, off-the-radar stock like this is the dearth of analyst coverage. That’s one less fly in the technical analysis ointment. Price Targets: 12-month targets display encouraging upside, ranging from a conservative floor of $73 to a high of $90, driving the average consensus target price to $82.The Bottom Line on WFG
West Fraser Timber is demonstrating excellent structural recovery patterns, confirming that the intermediate commodity-driven distribution cycle has run its course. If so, the stock’s attractive features, including low debt and a double-digit revenue growth rate, could bring this stock back into the positive spotlight. This company operates in a notoriously cyclical industry. That means when the cycle turns up, profits can be made.
On the date of publication, Jim Van Meerten did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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