Saturday, July 25, 2015

Norbord back (in my portfolio) with 50% more stock

My TFSA is blue line mostly at top.
Recently I sold all my Norbord (NBD) -- all being 400 shares. I did O.K. with NBD. It helped propel my TFSA to heights that often bested the TSX. But when NBD passed the $28 mark, I bailed.

Last Friday NBD dropped to $24.10. I bought 600 shares. This means I have about $14,470 in NBD. My limit is $15,000. I'm now fully invested. It is time to sit quietly and watch the action.

And just what is this action that I expect? There isn't anything, to tell the truth, at least not in the short term. I'm not a fortune teller. The economy may weaken and drag NBD down or the sale of new homes in the States may strengthen and drive NBD's value north of $30. (Some analysts have set a target of $27 for the stock in the coming 12 months.)

After chopping the all-too-generous dividend to a more reasonable yield, I was surprised to see a second cut dropping the dividend from a dollar a year to 40-cents. Oh well, the dividend may not have been safe but I believe the company is. Norboard is a good company making a good product -- OSB or oriented strand board. Many claim that OSB is as good as plywood but less expensive. Home builders love it.

If home building in the U.S. continues to recover, the price of OSB should climb, sales of the large sheets should grow and Norbord, a big supplier of OSB, should prosper. Home building in the States may stall in the short-term but eventually the pent-up demand will benefit OSB producers like Norbord. Sooner or later I believe I will be holding a winner.

This is not advice, I don't give advice -- and a good thing too. I have been wrong on this stock in the past. I thought the 4 percent dividend was safe. It wasn't. I thought OSD would have rebounded by now. It hasn't. In fact, it has taken another dip. Two big disappointments. Still, I have confidence that I will do just find with this investment but patience is the now the name of the game.

The best think I can say for NBD today is that the stock adds diversity to my portfolio and in this sense enriches it.

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