Value investing is a strategy that involves identifying quality companies trading at a discount to their intrinsic value. Typically, undervalued stocks are priced at an attractive multiple and positioned to deliver market-beating returns as investor sentiment improves.
In this article, I have identified one such undervalued Canadian stock you can buy in November 2025. Valued at a market cap of $4.7 billion, West Fraser Timber (TSX:WFG) is down almost 40% from all-time highs, allowing you to buy the dip.
West Fraser Timber is a diversified Canadian wood products manufacturer that produces lumber, engineered wood products, pulp, and newsprint. West Fraser serves major retail chains, wholesalers, and industrial customers across North America, Europe, and internationally for home construction, repair, paper products, and industrial applications.
Let’s see if WFG stock is a good buy right now.
Is this Canadian stock undervalued in November 2025?
West Fraser Timber’s strong balance sheet allowed it to navigate a challenging Q3. The Canadian lumber giant exited the third quarter with US$1.6 billion in available liquidity and US$212 million in cash, which provides it with flexibility amid near-term headwinds.
Management’s decisive early-cycle actions have fundamentally strengthened the company’s competitive positioning. West Fraser removed 820 million board feet of capacity over the last three years, accounting for 12% of total lumber production capability. An optimized portfolio eliminates high-cost operations while simultaneously acquiring premium lumber and OSB (oriented strand board) assets.
The company’s balanced capital allocation strategy continues to deliver shareholder value even during difficult market conditions. West Fraser deployed US$65 million toward share buybacks and dividends in the third quarter while investing US$90 million in strategic capital projects that will drive costs lower as they become operational.
The Henderson mill replacement project is entering its commissioning phase, which is expected to drive efficiency upgrades that will enhance margins when market conditions improve.
North American lumber supply has been trending structurally lower as high fibre costs, legacy technology, and increased duties force permanent capacity closures across the industry.
West Fraser’s modern, well-capitalized asset base and access to economically viable timber supply positions it to capture disproportionate market share when housing demand recovers. New material supply additions face substantial obstacles, including scarce fibre access, prohibitive capital costs, and limited residual product outlets.
Early signs of improvement are emerging in European operations, where OSB demand and pricing have shown sequential quarter-over-quarter gains.
The company’s geographic and product diversification provides natural hedges against regional weakness while maintaining exposure to multiple recovery catalysts. With U.S. housing starts averaging just 1.3 million units through August, substantial pent-up demand continues to build.
Why is the TSX stock undervalued?
Analysts tracking West Timber stock forecast sales to decline from US$6.2 billion in 2024 to US$5.5 billion in 2025. The company is forecast to report a loss per share of US$3.86 in 2025, compared to earnings per share (EPS) of US$1.20 in 2024. However, analysts forecast revenue to increase to $7.1 billion in 2029 while adjusted EPS is projected at $8.52.
The timber giant is also expected to report free cash flow of US$912 million in 2029, compared to a $252 million outflow this year. If the TSX stock is priced at 10 times forward FCF, it could surge over 100% within the next 45 months.
West Timber is also forecast to pay shareholders an annual dividend of US$1.28 in 2025, which translates to a yield of 2.2%. Given its outstanding share count, West Timber’s annual dividend expense is around US$100 million, indicating a payout ratio of less than 50% for 2026.
West Fraser’s investment-grade balance sheet, optimized asset portfolio, and operational discipline position the company to generate exceptional returns when mortgage rates moderate and housing activity normalizes.
