One Must-Buy Stock and One to Avoid as Tariffs Shake the Market

Core Viewpoint - The announcement of trade tariffs by President Trump on trading partners like Canada and Mexico presents a significant investment opportunity, particularly in the lumber industry, as it allows investors to hedge against rising costs and tariff uncertainties [1][2]. Lumber Industry Focus - The lumber industry is highlighted as a potential buy opportunity due to its ability to hedge views on upcoming tariffs, with consumer discretionary sectors facing rising costs and declining consumer spending [2]. - The U.S. imports approximately 30% of its lumber consumption from Canada, and the imposition of tariffs may lead to increased domestic production to offset cost increases [3]. Investment Recommendations - Investors are advised to avoid the consumer branch of the lumber industry, specifically companies like Williams-Sonoma, while considering shares of Weyerhaeuser for potential upside [3][5]. - Weyerhaeuser is projected to have a 12-month stock price forecast of $35.00, indicating a 14.05$1.6 billion worth of stock [9]. Market Dynamics - The SDPR S&P Homebuilders ETF has seen a decline of 15.5% over the past quarter, reflecting bearish sentiment in the housing market due to rising lumber prices and potential construction activity stalls [4]. - The forecast for Weyerhaeuser's earnings per share (EPS) is expected to rise from $0.11 to$0.25 in the third quarter of 2025, which could positively influence stock prices and valuations [10]. Company Performance - Williams-Sonoma has experienced a decline of 10.6% in stock price over the past month, with concerns over increased inventory costs and sluggish consumer activity leading to potential write-offs and lower EPS [6][8]. - The current P/E ratio for Weyerhaeuser stands at 56.3x, significantly higher than the construction sector's average of 16.2x, indicating market confidence in its growth potential despite being perceived as expensive [11].