Stock market investing in Canada gives you exposure to a wide range of industries, making it possible for you to allocate money to equity securities in whatever sector you find interesting. If you are still new to investing, know that the finance and energy industries are the heavyweights that attract most of the capital.
However, there are several under-the-radar stocks in other sectors that can provide you with substantial returns on your investment, especially if you have a long investment horizon.
One such sector to consider is the timber and forests industry, with names like Acadian Timber (TSX:ADN) and Stella-Jones (TSX:SJ) being the most prominent in the sector. Year to date, these two publicly traded timber and forest companies have outperformed the TSX in 2023.
As of this writing, the S&P/TSX Composite Index is up by 4.27% year to date. In the same period, Acadian Timber stock and Stella-Jones stock are up by 12.14% and 60.31%, respectively. After putting up a terrific performance in a year filled with challenges, these two stocks are worth keeping on your radar, if not already in your portfolio, today.
Acadian Timber is a $289.97 million market capitalization company that sells a wide range of wood products to an expansive customer base. Hardwood and softwood sawlogs, pulpwood, and biomass by-products account for its bestsellers, diversifying its revenue across several important and in-demand products.
The company provides its customers with wood products by sourcing them from over 1.1 million acres of freehold timberlands. Additionally, the company provides timber services to roughly 1.3 million acres of Crown-licensed timberlands.
The company relies on sustainable forest management to ensure it can maximize cash flows. With the forestry industry being reputably stable, Acadian Timber has a positive long-term outlook on the demand for its products and services. As of this writing, Acadian Timber stock trades for $16.81 per share and pays its shareholders their payouts at a juicy 6.90% dividend yield.
Stella-Jones is a $4.56 billion market capitalization company is another business selling lumber and wood products.
The key winning point of this stock is that the business primarily provides products made from pressure-treated wood, like railway ties, residential lumber, utility poles, and other industrial products. Headquartered in Saint Laurent, Stella-Jones provides products essential to physical infrastructure in North America’s economy.
With wood-treating facilities diversified across Canada and the U.S., it meets the ever-growing demand for infrastructure investments throughout the two countries. Besides organic growth through the essential nature of its products, Stella-Jones has also made several acquisitions over the last two decades to fuel its growth.
With the demand for pressure-treated wood products only expected to grow in the coming years, it has plenty of runway to increase shareholder value for years. As of this writing, it trades for $79.48 per share and distributes payouts to its investors at a 1.16% dividend yield.
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Considering that the two timber and forest stocks outperformed during a bear market, imagine the boost in revenue when the next bull market arrives. As the prospects for the forestry and logging market remain bright, investing in this sector can mean enjoying wealth growth through dividend income and long-term capital appreciation.