Finding a magnificent stock doesn’t always mean buying what’s trending. More importantly, it’s about finding what’s under pressure, misunderstood, or simply out of favour right now. That’s how you can earn solid returns on your investments and create long-term wealth.
Earlier this month, one Canadian company, West Fraser Timber (TSX:WFG), missed Street analysts’ earnings expectations, but it still has the financial strength and strong long-term outlook that could help it reward patient investors in the coming years. Let me explain why West Fraser stock, currently trading 30% below its 52-week peak, is still worth owning and forgetting about in your portfolio for years to come.
A top beaten-down Canadian stock to buy now
In case you didn’t know, West Fraser is one of the largest wood products makers in the world. Based in Vancouver, the company runs more than 50 facilities across Canada, the U.S., the U.K., and Europe, and mainly supplies lumber, plywood, engineered wood, and pulp.
After declining sharply in recent months, WFG stock currently trades at $98.86 per share with a market cap of $7.8 billion. At this market price, it also offers a quarterly dividend with an annualized yield of 1.8%. Now, let’s take a look at what’s been weighing on the stock lately.
Recent challenges have created a buying window
The company’s latest earnings release, for the second quarter of 2025, clearly showed a continued slowdown in demand for wood-based building materials, especially in North America. Weaker demand led to a 10% year-over-year decline in West Fraser’s quarterly sales to US$1.5 billion. As a result, it posted an adjusted net loss of US$0.38 per share, much worse than analysts’ expectations of US$0.84 per share in earnings.
Notably, West Fraser’s lumber and engineered wood segments, which make up the bulk of its business, were hit by lower realized prices, inventory adjustments, and weaker market conditions.
Though these numbers don’t tell the full story. Despite this, the company’s core fundamentals and liquidity position remained intact. It ended the quarter with US$646 million in cash and increased its term loan to US$300 million. That gives it plenty of flexibility to ride out the downturn and invest in future growth.
In the latest quarter, its OSB (Oriented Strand Board) shipments in North America rose sequentially, offsetting some of the pricing pressure. And seasonal factors drove a rebound in its lumber and OSB shipments from weather-related disruptions seen earlier in the year.
Long-term strategy remains focused and resilient
While West Fraser has trimmed its shipment guidance due to ongoing tariff uncertainty and softer housing demand, its bigger picture remains solid. The company is actively investing in modernizing its mills in Texas and South Carolina and sees long-term demand growing from aging housing stock, new home construction, and increased use of mass timber.
The company’s shift toward lower-cost, lower-risk regions like the U.S. South has helped improve its competitiveness. Plus, more interest rate cuts in the near term could gradually improve housing affordability, which should lead to stronger demand for wood products in the coming quarters.
Besides these positive factors, its strong balance sheet and reliable dividends increasingly make West Fraser stock you’d want to own before the cycle turns in its favour again.
