GreenFirst Forest Products: A Contrarian Gem in the Lumber Sector’s Turnaround

The lumber market has been a rollercoaster in 2025, with U.S. tariffs, weather disruptions, and volatile housing demand pushing companies to the brink. Yet amid this chaos, GreenFirst Forest Products (TSX: GFP) is emerging as a contrarian play to watch. Its Q1 2025 results—driven by higher lumber prices, cost discipline, and USMCA-exempt trade advantages—paint a picture of a company positioned to capitalize on a cyclical rebound. For investors willing to look past near-term noise, GFP offers a rare combination of tariff resilience, operational agility, and ESG alignment at a deeply discounted valuation.

Tariff Resilience: Navigating Trade Headwinds

Lumber producers have long been collateral damage in U.S.-Canada trade disputes. But GreenFirst’s USMCA exemption status shields it from the worst of these storms. While the U.S. briefly reinstated tariffs in early March 2025, the reversal within 48 hours—and subsequent broad 10% tariffs exempting USMCA-compliant goods—highlighted the company’s strategic advantage.

GreenFirst’s lumber qualifies under USMCA rules, as its wood is sourced from FSC®-certified Ontario forests and processed domestically. This ensures its shipments bypass the punitive duties plaguing competitors. Even as U.S. trade agencies probe potential anti-dumping measures, the company’s compliance with North American trade rules provides a critical buffer.

Cost Discipline: Turning the Profit Corner

GFP’s Q1 2025 results underscore its shift from survival mode to profitability. Despite lower shipment volumes due to Ontario weather disruptions, cost reductions drove a 3% revenue rise to CA$71.8M while slashing cost of sales by 9% to CA$62.1M. Even SG&A expenses fell to CA$2.6M, reflecting strict cost management.

The company’s focus on operational efficiency has paid off. By pausing non-essential spending from its CA$50M strategic plan and optimizing production, it posted positive EBITDA and net income for the quarter—no small feat in an industry still reeling from 2023’s collapse.

Strategic Positioning: Housing Recovery and ESG Tailwinds

The U.S. housing market is showing signs of stabilization, with mortgage rates dipping to 6.1% and price growth moderating. This bodes well for lumber demand, as buyers return to new construction and renovations. GreenFirst’s management points to a 4-million-unit housing shortage in the U.S., a structural deficit that should support demand for years.

Meanwhile, ESG-driven demand is a tailwind. GreenFirst’s 6.1M hectares of FSC-certified forests align with investor priorities for sustainable materials. Its carbon-sequestering lumber products are increasingly marketed as climate solutions—a selling point as institutional investors ramp up ESG scrutiny.

Valuation Case: Undervalued at CA$4.00

At CA$4.00 per share, GreenFirst trades at a 0.3x price-to-sales ratio and a negative P/E ratio due to trailing losses. But forward metrics tell a different story. The company projects CA$1.08 EPS in 2025 and CA$4.00 in 2026, implying a forward P/E of just 0.7x—a bargain for a business with a path to profitability.

Third-party analysis adds credibility. Stockcalc’s intrinsic value estimate of CA$4.24 suggests the stock is 8.7% undervalued, while its conservative debt-to-equity ratio of 10.5% and CA$40.3M in available credit underscore balance sheet strength.

Risks and Why They’re Overblown

Critics will cite risks like ongoing trade investigations and labor cost pressures. Yet GreenFirst’s nimble strategy—pausing capital spending, selling non-core assets, and extending credit facilities—has bolstered liquidity. Even the temporary March 2025 tariffs were reversed swiftly, illustrating the political limits of punitive measures in a supply-chain dependent relationship.

Conclusion: A Contrarian Buy in a Cyclical Industry

GreenFirst Forest Products isn’t a “growth stock” in the traditional sense. But for investors who believe in cyclical rebounds and ESG-driven structural shifts, it’s a compelling value play. With a CA$90M market cap, a path to positive margins, and a moat against tariffs, this lumber producer is set to outperform when the sector turns.

The risks are real, but the valuation is too cheap to ignore. GFP at CA$4.00 is a buy for investors willing to bet on housing stabilization, trade resilience, and ESG demand—three trends that will define the next decade in forestry.

Final word: This is a “dirt cheap” stock in a sector due for a rebound. Act now.