It’s easy to look at a beaten-down stock on the TSX and think, “Wow, good thing I didn’t buy that!” But in many cases, investors might instead want to think, “Huh, I wonder if I should buy in?”
Sure, not all TSX stocks will fall into this “buy” category, but if it’s down for cyclical reasons and not a broken business, it can look far more appealing. That’s why today we’re looking at one company that has one major catalyst that could turn it from a buyer beware to a screaming buy.
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WFG
West Fraser Timber (TSX:WFG) is one of North America’s largest wood-products companies, making everything from lumber and plywood to newsprint and even renewable energy. Its operations span Canada, the United States, the United Kingdom, and Europe. And if homes, renovations, packaging, and industrial construction need wood products, West Fraser likely sits somewhere in that supply chain.
Over the last year, weak lumber demand continued to push the company lower. Mill closures and softwood lumber duties didn’t help either. In fact, WFG stock permanently closed its 100 Mile House, B.C. lumber mill and curtailed other production to manage supply, and dealt with a fire in Alberta causing a temporary shutdown. This brought volumes down to 555 million board feet in Q1 2026 from 669 million in 2025.
Into earnings
But don’t let those numbers fool you. As you can see, there’s been a temporary shutdown, and tariffs can either ease off, or the company will likely learn to adapt. One thing is for sure: housing is needed, and WFG can build it. That’s why there was more to look at from the first quarter of 2026.
For instance, while there was a reported loss of US$188 million, sales actually increased to US$1.33 billion from US$1.17 billion quarter over quarter. Plus, the loss improved substantially from the US$751 million quarter over quarter, showing a major turnaround. So yes, while WFG stock looks beaten down from a 2024 and 2025 numbers perspective, it looks as though 2026 will be the year of a turnaround.
Looking ahead
So now that we have a small glimpse into the future, WFG stock doesn’t look so bad after all. In fact, it looks downright undervalued. The company currently trades at 0.86 times book value, and 0.92 times sales. Shares are down 22% in the last year, while it offers up a solid 2.2% dividend yield.
Meanwhile, if interest rates trend lower or housing activity improves, lumber and engineered wood demand could recover. WFG stock has huge operating leverage, meaning even a modest pricing improvement can make earnings look much better. What’s more, WFG stock also kept investing through the downturn, with US$411 million in capital spending in 2025 and US$94 million in Q1 2026. That will lead to better productivity and more capacity once this weak cycle comes to an end.
Bottom line
WFG stock might not be the best buy for every investor. But for those looking well into the future, when housing demand returns, this cyclical influence will be in its rearview mirror. That’s why it’s a solid opportunity for investors thinking about its scale, hard assets, global operations, and exposure to a future housing recovery.
The latest earnings looked ugly on the surface, but the underlying improvement from Q4 gives investors something to watch. For a patient investor who can handle bumps, WFG stock may be one of the more interesting beaten-down TSX stocks to consider before the cycle turns.
