If you live on the west coast of British Columbia in a Forestry town than you should be very familiar with the cyclical cycles of the Forestry Industry.  You will know when the sector is picking up again far before any bum on Wall Street or Bay Street.  Take a look at a local logging operation and you can see what I mean.  Is their storage yards which have lain empty for the past few years beginning to fill up with raw logs again? Do you hear the rumble of logging trucks moving raw timber logs at 6 in the morning?  As a local logging specialist you should also see tough times on the horizon as inventory yards swell with wood that has no buyers.

Far before North America or the World moved into recession the Forestry Sector was well into a long and deep contraction.  Loggers to mill workers to truck drivers saw their jobs disappear with no hope in sight.  This industry was hurt far before the US Housing Boom busted and far before the peak of the last true bull stock market rally.

Fast forward to our current recession or recovery (depends who you ask) and you can see some of the biggest winning stocks since the summer are non other than forest stocks.  Take a look at Canfor Income Fund for example, since July the stock has rallied almost 260% and the monthly dividend distribution is back and on the increase.  Don’t believe me; look at the chart below of CFX.UN .

Now, it may still sound surprising that forestry stocks are on the mend in a big way because US Housing starts are still zilch, but there are more factors at play here.  The sector has been down sizing for years and production at abysmal levels so what ever production there has been has been sold off so inventories are way down.  This process has continued thru much of British Columbia and there have even been further shut downs up in Quesnel BC, which you may think bodes negatively for the sector; however, there is something very important happening on the Coast of Vancouver Island that screams let the good times roll.  I’m assuming most people are oblivious to this so I digress.

The forests of BC were once one of the most cost effective and efficient areas in the world to log.  Simple cut a tree down a tree and it falls immediately into the river/ocean and is carted off to the mill or your cuts were immediately adjacent to a highway.  This was not a dream.  It was reality.  There were no two hour drives into the bush to reach a site, make a few cuts and then ship two more hours back.  The forests were easily accessible.

Back to the point, what was once old growth easily accessible timber was cut some 80 years ago and now these areas are ripe with re-growth timber quality trees just begging to be logged in a most environmentally friendly way.  Look no further than Duncan BC and you will know exactly what I mean.

So what stocks might you consider?

Here is a brief list, there are obviously many more to be added but this is a starting point, not a destination:

• Canfor (CFP)
• Canfor Income Fund (CFX.UN)
• West Fraser Timber (WFT)
• TimberWest Forest (TWF.UN)
• Western Forest Products (WEF)