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Show yiimber Industry On downward Trend tcent e.irs the earnings '(.' jor companies in the lum-jnJustr lum-jnJustr such as rlueuser, Georgia-. Georgia-. jc, Louisiana-Pacific, , ' fion International, and : Cascade have been ,, W sharply downward ' ' the recession, espccial-r espccial-r :the housins industry. ' "ST YEAR'S fourth quar-" quar-" : js a particularly difficult for most of the wood -iict firms. This year, yer, the leading com-:s com-:s in this industry are ins on a good upturn in Vv cusinj industry to im-vA im-vA : their operations. 4 3rd the end of last year Yng ended on a strong up-', up-', and industry olTicials Ithe rebound to continue igh 1 9 S 3 . They warn, vcr, that the strong in-y in-y upturn could stall un-toiected un-toiected FederaJ deficits " ' duced. The recovery w ill depend largely on whether interest in-terest rates remain stable or drop further. AT A RECK NT hearing in Washington, government and industry representatives generally gen-erally agreed that they expect construction to be started on 1.3 million to 1.5 million housing hous-ing units this year, up from about ab-out I.OoO.OOO in 1982. in 1481 they numbered I.S84, 200 units. If this occurs, it naturally spells good news for the lumber lum-ber industry w hich had actually actual-ly shown steady gains since last fall. Prices for forest timber tim-ber and milled lumber have re-hounded, re-hounded, and inventories at western sawmills recently dropped to their lowest levels since World War II. Some lumber lum-ber plants ha e been operating at 90 percent of capacity for several months in order to restock res-tock the pipelines. THE MANAGEMENTS of several forest product companies com-panies are on record as predicting pre-dicting better results this year. For example, the Champion International management stated awhile ago, "the overall economic situation is still exceedingly ex-ceedingly fragile and difficult to predict." Hut it added "at long last there are some glimmers glim-mers of life in the housing market, mar-ket, so 1983 ought to be better." Georgia-Pacific management manage-ment stated, "Last year can best be view ed as a year of unusual un-usual circumstances, with the prospect of more normid-and prosperous-conditions in the future." THE HEAD of Boise Cascade Cas-cade has indicated that the building material segment of the community should get a lift because of a modest improvement improve-ment in home construction. Considering the downturn in earnings experienced by the foremost forest product companies com-panies last year, one might suppose that the stocks were severely depressed. However, such is not the case. For the most part, share prices have participated in the overall market mar-ket advance and have rebounded re-bounded well from their earlier lows. , RECENTLY the stocks of most of the wood products companies were priced near their 52-week highs. Obviously, Obvious-ly, therefore, investors have been anticipating an improvement improve-ment in industry conditions and a return to a healthier building environment. In recent years the Research Department of Babson's Reports Re-ports recommended the purchase purch-ase of the stocks of three industry in-dustry leaders-Champion International, In-ternational, Georgia-Pacific, and Weyerhaeuser. Now, the advice is to hold these three issues along with two other important im-portant firms in the industry-Boise industry-Boise Cascade and Louisiana-Pacific. Louisiana-Pacific. BECAUSE the stocks of the above-mentioned forest product pro-duct companies have all risen substantially from their earlier lows in anticipation of an earnings earn-ings turnaround for the industry, indus-try, the Babson Research Staff is not anxious to "reach for them" by recommending purchase. pur-chase. But they all appear to be well worth holding at current levels. Purchases might again be recommended on a market pullback. |
