West Fraser Stock: A Sneaky Growth Stock No One Talks About

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Canadian investors continue to seek a solid growth stock in the TSX today, especially after a year full of losses. But alongside growth, investors want strong dividends. And yet no one mentions West Fraser Woods (TSX:WFG)(NYSE:WFG), which currently owns both.

Today we’re going to take a look at West Fraser stocks and see why it’s not only a solid company to own now, but the perfect game during the current market downturn.

An industry staple

Shares of West Fraser stocks have been falling year-to-date. But the fall was much less dramatic than for many other companies. Stocks are down 14% year-to-date, with stocks falling last week before starting to rebound again. Over the weekend alone, stocks recovered 6% as the market rebounded. And that could come from his necessary stock position.

West Fraser’s stock is in the lumber industry, and it’s a solid industry to be in during tough economic times. Wood is used for everything from paper to buildings, making it a necessary commodity that the world simply cannot live without.

And we’ve certainly seen it during the company’s earnings reports.

Latest earnings growth

The West Fraser stock has seen massive growth lately, even in bad weather, not to mention poor market conditions. The growth stock saw its net profit jump 64% from the same period in 2021 to $1.09 billion. This happened despite transportation issues, factory challenges and supply chain demands.

The company’s revenue increased 33% to $3.11 billion in the first quarter of 2022. It was expected to generate $2.93 billion in revenue, beating estimates. What’s exciting is that, despite the weather challenges, it has managed to create strong demand, and that should continue down the line.

The biggest long-term problem would be rising interest rates for growth stocks. This could lead to a drop in residential construction and wood building products. Although there is a risk, it should also be noted that many construction companies are late in building projects, so investors should not worry too much.

Dividend jump

Meanwhile, West Fraser stock just increased its dividend by 20% in the latest earnings report. It now offers a dividend yield of 1.59% for investors. That works out to $1.53 per share on an annual basis. Plus, you can collect the dividend while the company is still offering incredible value.

Currently, shares of West Fraser are trading at just 2.52 times earnings. It trades at a price-to-book ratio of just 0.82, and its leverage ratio sits at 0.07! Thus, it has more than enough equity to cover its debts, providing investors with strong value should they buy the stock today.

Finally, you could see stocks soar 54% next year, if analysts are right in their consensus price target. So if investors were to invest $5,000 in West Fraser stock, they would receive a dividend of $77.27, along with a potential return of $2,778 in stock growth.

About Warren Dockery

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