Resolute Forest Products (RFP) - Getting Jiggy With The Trees

avatar

Big Tech is selling off so it's starting to look like a good time to evaluate the value options in non-tech related sectors. This has me getting jiggy with the trees as I look at one of the few sectors that has actually outperformed technology on the commodity level - lumber. Yes, at its peak in February lumber only fetched $436 and yet it now continues to outperform with more than double that level even after a recent pullback.

One company that has my eye now is Resolute Forest Products (RFP). The company has a mere $417 million market cap despite sporting equity of $1.25 billion. While the company's debt load remains high, the huge bump in lumber prices are sure to provide a nice amount of cash flow to the company in the coming quarter. Depending on how long the price spike lasts, one can imagine a much better balance sheet in the years to come.

And just how big is RFP? Well, let's just say it's not small as it appears to compete well with other top lumber companies, many of which have much larger market caps. West Fraser, for example, supports a C$4.57 billion market cap and Canfor has a C$2.11 billion market cap. Weyerhaeuser is a beast of its own with a $21 billion market cap but its far more diversified into other forest-related assets.


https://www.sawmilldatabase.com/productiontoplist.php

Trading at incredibly weak metrics, RFP currently sports a price-to-sales ratio of 0.16 and a price-to-book ratio of 0.34. With the strength of its core market now in full swing, I question if this discounted valuation remains justified - even with its large debt load.

Posted Using LeoFinance



0
0
0.000
1 comments
avatar

Congratulations @videosteemit! You have completed the following achievement on the Hive blockchain and have been rewarded with new badge(s) :

You received more than 7000 upvotes. Your next target is to reach 8000 upvotes.

You can view your badges on your board and compare yourself to others in the Ranking
If you no longer want to receive notifications, reply to this comment with the word STOP

Do not miss the last post from @hivebuzz:

HiveBuzz supports meetups of the Hive UK Community
Feedback from the September 1st Hive Power Up Day
0
0
0.000