What do you think of Norbord inc?

Question

It is a Canadian company that makes baseboards and other products for homes and has a market cap of about 1 billion.
It is at a fairly good price right now, any thoughts for buying?

Answer 1

I usually approach the idea of a new acquisition somewhat like an artichoke, stripping away the negative characteristics one leaf at a time, until finally, if there's anything left that's still positive, I get down to studying that.

First negative about Norbord: OSB (orientated strandboard, co's principal product) is too leveraged to collapsing north american housing market.

Next: Moody's just downgraded norbord debt.

Next: canadian forest products may be a gradually dying industry. The big competition is coming from countries with much warmer climates like Brazil that can grow their trees much faster. Cold canadian climate enforces a slower growth rate, industry has been cycling down for past 20 years.

Next: the technical analysis chart for NBD is negative.

However, if you've managed to read this far, there's a couple of small decent bites left in the artichoke heart.

Positive: two company officers (insiders) bought about $32,000 stock within past 60 days. Please note that this is a very small amount.

Also: one brokerage is recommending stock. Please note they have a financial relationship with NBD and I find their recommendation to be lukewarm. However, here's what TD Securities has to say:

Norbord Inc.
(NBD-T ) C$9.65 Target 11.00
Soft Q4/06 Results. No Change to Target or Recommendation

Norbord reported soft Q4/06 earnings that were below our expectations. The Q4/06 adjusted net loss of $0.01 per share was in-line with our forecast net loss of $0.02 per share (equal to consensus), but was skewed by an
unexpectedly high tax recovery. Q4/06 EBITDA of $22 million was below our forecast (and consensus) of $26 million. Reported EBITDA included a $7 million softwood lumber duty refund, which was not factored into our
forecast (i.e., EBITDA from operations was $15 million).
Impact
Slightly Negative - These were disappointing results, but we are comforted by the fact that the discrepancy between our forecast and actual results primarily
relates to price realizations – not operating costs. Our positive investment bias towards Norbord is partly based on the company’s cost advantage, which we expect will expand through the current trough. We are lowering our
H1/07 OSB price forecast to account for unexpectedly severe market weakness to start the year (our earnings estimates have declined in tandem with this adjustment). Despite these changes, we reiterate our BUY recommendation and 12-month target of C$11.00 per share. We consider this equity attractively valued for investors willing to look past the next couple of quarters.

Looking now at the artichoke heart on my plate, would I buy Norbord? No. There are several more attractive sectors and stocks in Canada.