September 26, 2024
Top 10 Stock West Fraser Strong Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: West Fraser – Top 10 Stock in Recycling Leaders
West Fraser is listed as a top 10 stock on September 26, 2024 in the market index Recycling because of its high performance in at least one of the Obermatt investment strategies. As all consolidated Obermatt Ranks exhibit excellent performance, including positive market sentiment in the professional investor community, it is a solid stock investment where the risk of paying too much for the shares is limited. Based on the Obermatt 360° View of 94 (top 94% performer), Obermatt assesses an overall strong buy recommendation for West Fraser on September 26, 2024.
Snapshot: Obermatt Ranks
| Country | Canada |
| Industry | Forest Products |
| Index | Low Waste, Recycling, Timber Industry, TSX Composite |
| Size class | X-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View West Fraser Strong Buy
| 360 METRICS | September 26, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 59 |
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| GROWTH | ||||||||
| GROWTH | 95 |
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| SAFETY | ||||||||
| SAFETY | 62 |
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| SENTIMENT | ||||||||
| SENTIMENT | 71 |
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| 360° VIEW | ||||||||
| 360° VIEW | 94 |
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ANALYSIS: With an Obermatt 360° View of 94 (better than 94% compared with alternatives) for 2024, overall professional sentiment and financial characteristics for the stock West Fraser are very positive. The 360° View is based on consolidating four consolidated indicators, with all four indicators above average for West Fraser. The consolidated Value Rank has an attractive rank of 59, which means that the share price of West Fraser is on the lower side compared with the typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 59% of alternative stocks in the same industry. The consolidated Growth Rank has a good rank of 95, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. The company is also safely financed with a Safety rank of 62. Finally, professional market sentiment is above average compared with other stock investment alternatives with a Sentiment Rank of 71. ...read more
RECOMMENDATION: With a consolidated 360° View of 94, West Fraser is better positioned than 94% of all alternative stock investment opportunities based on the Obermatt Method. As all consolidated Obermatt Ranks exhibit excellent performance, such as good value (Value Rank of 59), above-average growth (Growth Rank of 95), safe financing practices (Safety Rank of 62), and a positive market sentiment in the professional investor community (Sentiment Rank of 71), it is a solid stock investment where the risk of paying too much for the shares is limited and disappointments are less likely to occur, unless information not publicly available. High-Value Ranks sometimes indicate that the company's future is challenging. If they are safely financed and have above average growth, and are still a good value, it may indicate that this will not continue. We recommend evaluating whether the future of West Fraser is as difficult as the stock’s low price, despite what good growth and safe financing practice suggest. Since the professional community is optimistic, you might have less to worry about, and the stock is just not sufficiently visible, which may indicate good timing right now. ...read more
Sentiment Strategy: Professional Market Sentiment for West Fraser positive
ANALYSIS: With an Obermatt Sentiment Rank of 71 (better than 71% compared with alternatives), overall professional sentiment and engagement for the stock West Fraser is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for West Fraser. Analyst Opinions are at a rank of 95 (better than 95% of alternative investments), which means that, currently, stock research analysts tend to recommend a stock investment in the company. In addition, Analyst Opinions Change has a rank of 50, which means that stock research experts are changing their opinions for the better in recommending investing in the company. In other words, they are getting even more optimistic about investments in West Fraser. Finally, the Professional Investors rank is 53, which means that currently, professional investors hold more stock in this company than in 53% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 71 (more positive than 71% compared with investment alternatives), West Fraser has a reputation among professional investors that is above-average compared with that of its competitors. Pros tend to favor investing in this company. But there is also a signal for caution. Market Pulse has a rank of 42, which means that the current professional news and professional social networks tend to be negative when discussing this company (more negative news than for 58% of competitors). This could mean future risks and should make investors careful. Attention to negative news for West Fraser is worthwhile because they may be early warning signals. Without those, all other professional signals are encouraging, especially since analysts are getting more optimistic. ...read more
Value Strategy: West Fraser Stock Price Value better than average
ANALYSIS: With an Obermatt Value Rank of 59 (better than 59% compared with alternatives), West Fraser shares are more attractively priced than the majority of comparable stocks. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for West Fraser. Expected dividend yields are higher than for 62% of comparable companies (a Dividend Yield rank of 62), making the stock attractive. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 83, which means that the stock price is lower compared with invested capital than for 83% of comparable investments. But in respect to sales and profits, the picture is reversed. Price-to-Sales is 49 which means that the stock price compared with what market professionals expect for future profits is higher than for 51% of comparable companies, indicating a low value concerning West Fraser's sales levels. The Price-to-Profit ratio (also referred to as price-earnings (P/E) ratio) is also unfavorable for West Fraser with a rank of 36. This means that the stock price, compared with what market professionals expect for future profits, is higher than for 64% of comparable companies, indicating a low value concerning West Fraser's profit levels. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 59, is a buy recommendation based on West Fraser's stock price compared with the company's operational size and dividend yields. The company seems confident that it can generate a reasonable return on invested capital, because it pays an above-average dividend while profits are below what you would expect for a company with this stock price. If you agree with this practice and believe that profits will return to higher levels, as the current dividend policy suggests, West Fraser may be an attractive investment. If this is not the case, you may want to be careful with this stock as it is also expensive compared with its expected revenue levels. ...read more
Growth Strategy: West Fraser Growth Momentum high
| GROWTH METRICS | September 26, 2024 | |||||||
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| REVENUE GROWTH | ||||||||
| REVENUE GROWTH | 86 |
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| PROFIT GROWTH | ||||||||
| PROFIT GROWTH | 100 |
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| CAPITAL GROWTH | ||||||||
| CAPITAL GROWTH | 32 |
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| STOCK RETURNS | ||||||||
| STOCK RETURNS | 73 |
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| CONSOLIDATED RANK: GROWTH | ||||||||
| CONSOLIDATED RANK: GROWTH | 95 |
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ANALYSIS: With an Obermatt Growth Rank of 95 (better than 95% compared with alternatives) for 2024, West Fraser shows one of the highest growth dynamics in its industry. Investors also speak of high momentum. The Growth Rank is based on consolidating four value indicators, with all but one indicator above average for West Fraser. Sales Growth has a rank of 86 which means that currently, professionals expect the company to grow more than 86% of its competitors. Both Profit Growth, with a rank of 100, and Stock Returns, with a rank of 73, are also above average. But Capital Growth only has a rank of 32, which means that, currently, professionals expect the company to grow its invested capital less than 68% of its competitors. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 95, is a buy recommendation for growth and momentum investors. That may be a good sign if the company is already well positioned and doesn't require more investments at this time. They may focus on growing the top (revenues) and bottom (profits) lines, recently rewarded with above-average stock returns for shareholders. But it may also be a sign of danger as the company is falling back with capital investment activities concerning competition. This requires further analysis of corporate communications. ...read more
Safety Strategy: West Fraser Debt Financing Safety above-average
| SAFETY METRICS | September 26, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 96 |
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| REFINANCING | ||||||||
| REFINANCING | 47 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 19 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 62 |
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ANALYSIS: With an Obermatt Safety Rank of 62 (better than 62% compared with alternatives), the company West Fraser has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of West Fraser is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with just one indicator above average for West Fraser and the other two below average. Leverage is at a rank of 96 meaning the company has a below-average debt-to-equity ratio. It has less debt than 96% of its competitors.Refinancing is at a rank of 47, which means that the portion of the debt about to be refinanced is above-average. It has more debt in the refinancing stage than 53% of its competitors. Liquidity is at a rank of 19, meaning that the company generates less profit to service its debt than 81% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 62 (better than 62% compared with alternatives), West Fraser has a financing structure that is safer than that of its competitors. This is an indication that the company is on the riskier side when it comes to debt service. There is only below-market average liquidity, and a short-term refinancing issue might be around the corner. But in the long-term, the debt levels of West Fraser are on the safer side. ...read more
Combined financial peformance: West Fraser Top Financial Performance
| COMBINED PERFORMANCE | September 26, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 59 |
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| GROWTH | ||||||||
| GROWTH | 95 |
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| SAFETY | ||||||||
| SAFETY | 19 |
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| COMBINED | ||||||||
| COMBINED | 90 |
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ANALYSIS: With an Obermatt Combined Rank of 90 (better than 90% compared with investment alternatives), West Fraser (Forest Products, Canada) shares have much better financial characteristics than comparable stocks. Shares of West Fraser are a good value (attractively priced) with a consolidated Value Rank of 59 (better than 59% of alternatives), show above-average growth (Growth Rank of 95), and are safely financed (Safety Rank of 62), which means low debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 90, is a strong buy recommendation based on West Fraser's financial characteristics. As the company West Fraser's key financial metrics all exhibit excellent performance, such as good value (Obermatt Value Rank of 59), above-average growth (Obermatt Growth Rank of 95), and indicate that the company is safely financed (Obermatt Safety Rank of 62), it is a solid stock investment where the risk of paying too much for the share is limited, unless the company has a bleak future. Such good financial performance can indicate that the company's future might actually be challenging, as it may be difficult to maintain the good performance. If they are safely financed and have been growing above average, and are still a good value, it means that the market is keeping prices low, for a reason which may become clearer over time. We recommend evaluating the future of West Fraser. If you believe the company's future is market-typical or even better, this could be an argument for a share purchase. ...read more
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