May 11, 2023
Top 10 Stock Canfor 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: Canfor – Top 10 Stock in Wood & Timber Industry
Canfor is listed as a top 10 stock on May 11, 2023 in the market index Timber Industry because of its high performance in at least one of the Obermatt investment strategies. While half the consolidated Obermatt Ranks are above-average, investor sentiment is negative and growth performance is below market average, both a sign for caution. Based on the Obermatt 360° Rank of 80 (top 80% performer), Obermatt assesses an overall strong buy recommendation for Canfor on May 11, 2023.
Snapshot: Obermatt Ranks
| Country | Canada |
| Industry | Forest Products |
| Index | Renewables Users, SDG 12, SDG 13, SDG 15, SDG 5, SDG 8, 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° Assessment Canfor Strong Buy
| 360 METRICS | May 11, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 58 |
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| GROWTH | ||||||||
| GROWTH | 39 |
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| SAFETY | ||||||||
| SAFETY | 100 |
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| SENTIMENT | ||||||||
| SENTIMENT | 42 |
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| 360° VIEW | ||||||||
| 360° VIEW | 80 |
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ANALYSIS: With an Obermatt 360° Rank of 80 (better than 80% compared with alternatives) for 2023, overall professional sentiment and engagement for the stock Canfor are very positive. The 360° Rank is based on consolidating four consolidated indicators, with half the metrics below and half above average for Canfor. The consolidated Value Rank has an attractive rank of 58, which means that the share price of Canfor is on the lower side compared with typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 58% of alternative stocks in the same industry. The company is also safely financed with a Safety rank of 100. But the professional market sentiment is below average compared with other stock investment alternatives with a Sentiment Rank of 42. Professional investors are more confident in 58% other stocks. The consolidated Growth Rank also has a low rank of 39, which means that the company is below average in terms of growth momentum when looking at financial metrics such as revenue, profit, invested capital growth, and stock returns. 61 of its competitors have better growth. ...read more
RECOMMENDATION: With a 360° Rank of 80, Canfor is better than 80% of all alternative stock investment opportunities based on the Obermatt Method. The picture is mixed here. The stock seems to be a good value (Value Rank of 58), and the financing structure is on the safer side (Safety Rank of 100). However, sentiment in the professional investor community is below-average (Sentiment Rank of 42), as is the growth momentum for the company (Growth Rank of 39). While everybody wants to buy at low stock prices (good value), professionals’ skepticism may mean that the low price is justified. Even though the financing structure is not as important as Value, Growth, and Sentiment, investors should still be careful with this decision and conduct further research if they are serious about investing in this company. ...read more
Sentiment Strategy: Professional Market Sentiment for Canfor only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 42 (better than 42% compared with alternatives), overall professional sentiment and engagement for the stock Canfor is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the indicators below and half above average for Canfor. Analyst Opinions are at a rank of 91 (better than 91% of alternative investments), which means that currently, stock research analysts tend to recommend a stock investment in the company. Market Pulse is also positive with a rank of 57, which means that the current professional news and professional social networks are positive when discussing this company (more positive news than for 57% of competitors). But Analyst Opinions Change is negative with a rank of 22, which means that stock research experts are changing their opinions for the worse in recommending the company. In other words, they are getting more critical of investments in Canfor. There are also only so many institutional investors holding company stock with a Professional Investors rank of 24, which means that, currently, professional investors hold less stock in this company than in 76% of alternative investment opportunities. Pros tend to invest in other companies. ...read more
RECOMMENDATION: With an Obermatt Sentiment Rank of 42 (less encouraging than 58% compared with investment alternatives), Canfor has a reputation among professional investors that is below that of its competitors. The signals are ambivalent. The positive news in the market contradicts the negative change in analyst recommendations. Since the overall analyst recommendations are still above average, the stock may be safer for investing, especially if it is not an extra-large company where Pros tend to be less present. In such a case, the Pro Investor rank is not a problem. ...read more
Value Strategy: Canfor Stock Price Value better than average
ANALYSIS: With an Obermatt Value Rank of 58 (better than 58% compared with alternatives), Canfor shares are more attractively priced than the majority of comparable stocks. The Value Rank is based on consolidating four value indicators, with three out of four indicators above average for Canfor. Price-to-Sales (P/S) has a value of 69, which means that the stock price compared with what market professionals expect for future sales is lower than 69% of comparable companies, indicating a good value concerning Canfor's revenue size. The same is valid for expected Price to Profits (or Price / Earnings, P/E), more favorable than 95% of alternatives, and it's also true for Price-to-Book Capital (also referred to as market-to-book ratio) with an Obermatt Price-to-Capital Rank of 89. But, compared with other companies in the same industry, dividend yields are expected to be lower than average; only 1% of all competitors have even lower dividend yields than Canfor (an Obermatt Dividend Yield Rank of 1). 99% alternative investments in the same business provide a higher dividend yield. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 58, is a BUY recommendation based on Canfor's stock price compared with the company's operational size and dividend yields. The below-average dividend yield may be a good sign, as it could mean the company has more attractive investment opportunities for the generated cash than to pay it out as dividends. A low dividend yield can also indicate a growth phase. ...read more
Growth Strategy: Canfor Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 39 (better than 39% compared with alternatives), Canfor shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Canfor. Sales Growth has a rank of 84 which means that currently, professionals expect the company to grow more than 84% of its competitors. Capital Growth is also above 1% of competitors with a rank of 60. But Profit Growth only has a rank of 1, which means that currently professionals expect the company to grow its profits less than 99% of its competitors. And Stock Returns have also been below average with a rank of only 31. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 39, is a HOLD recommendation for growth and momentum investors. Profits are sometimes low if the company invests in the future. The positive revenue and capital investment outlook confirms such an interpretation. Both revenues and capital are solid growth indicators, and lower profits in such a case would be encouraging. But the investors see it differently by punishing the share price. Sometimes, Mister Market is not very reliable, because it is not uncommon for it to be volatile. Investors should look out for signs of growth expenditure that could justify low profit growth, and they may also find reasons why recent stock price developments don't confirm the growth outlook of operations. While operating growth indicators are not perfect, they are more reliable indicators for future performance than stock prices that can repeatedly surprise investors. ...read more
Safety Strategy: Canfor Debt Financing Safety very solid
| SAFETY METRICS | May 11, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 90 |
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| REFINANCING | ||||||||
| REFINANCING | 91 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 88 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 100 |
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ANALYSIS: With an Obermatt Safety Rank of 100 (better than 100% compared with alternatives) for 2023, the company Canfor has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Canfor 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, where all three are above average for Canfor. Leverage is at 90, meaning the company has a below-average debt-to-equity ratio. It has less debt than 90% of its competitors. Refinancing is at a rank of 91, meaning that the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 91% of its competitors. Finally, Liquidity is also good at a rank of 88, which means that the company generates more profit to service its debt than 88% of its competitors. ...read more
RECOMMENDATION: With an Obermatt Safety Rank of 100 (better than 100% compared with alternatives), Canfor has a financing structure that is significantly safer than that of its competitors. These three positive financing indicators signal that the company is less likely to default on its debt obligations. However, it also means that its shareholder returns will be more modest if things go well. A low safety means fewer troubles in downtimes and less upside in good times. ...read more
Combined financial peformance: Canfor Top Financial Performance
| COMBINED PERFORMANCE | May 11, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 58 |
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| GROWTH | ||||||||
| GROWTH | 39 |
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| SAFETY | ||||||||
| SAFETY | 88 |
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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), Canfor (Forest Products, Canada) shares have much better financial characteristics than comparable stocks. Shares of Canfor are a good value (attractively priced) with a consolidated Obermatt Value Rank of 58 (better than 58% of alternatives), are safely financed (Safety Rank of 100, which means low debt burdens), but show below-average growth (Growth Rank of 39). ...read more
RECOMMENDATION: An Obermatt Combined Rank of 90, is a strong buy recommendation based on Canfor's financial characteristics. As the company Canfor's key financial metrics exhibit good value (Obermatt Value Rank of 58) but low growth (Obermatt Growth Rank of 39) while being safely financed (Obermatt Safety Rank of 100), it may be a safer investment because companies with low debt can better withstand times of crises. The good value, better than 58% of comparable companies, may also indicate that the company's future is challenging. If you believe that low growth is temporary or just due to a specific current event, you may conclude that the good value of the stock provides an attractive investment opportunity and the downside is limited due to below-average financing risks. ...read more
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