Housing has been an extremely good play for most investors in
the past year or so. However, the segment ran into a rough patch
earlier this year, as most housing stocks stumbled.
This was largely due to worries of continuing demand with
marginally higher rates, as well as some profit taking. After all,
many top housing ETFs -like
XHB and ITB -added more than 50% in 2012,
suggesting to some that the space was overbought.
Recent data that was released in the market suggested otherwise
though, as both existing home sales and new home sales posted solid
figures. While both missed the consensus, home price increases were
quite robust and inventory levels remained below five months,
suggesting a low supply (also read Homebuilder ETFs Surging Again ).
This caused many investors to pile back into the aforementioned
homebuilder ETFs, but is this really the best option going forward?
There is actually another key segment which could be a better
option for those who want a housing recovery play, timber ETFs.
Timber ETFs in Focus
Currently there are two timber ETFs on the market,
Guggenheim Timber ETF ( CUT ) , and the iShares S&P
Global Timber & Forestry Index Fund ( WOOD ). While the two have a few
differences-such as expense ratios and U.S. holdings-both provide
great exposure to the broad timber industry (see Timber ETFs Head-to-Head ).
This segment is obviously a key beneficiary of the housing
uptrend, as timber and related products are vital for new houses,
and a variety of other housing related products like flooring.
However, CUT and WOOD haven't been as bid up over the past 12
months, so they could be better options going forward.
Additionally, they have shown some degree of leadership after
the latest round of housing data, and indeed, in 2013
overall as well. This suggests that these two could be the
better ways to play housing in the months ahead, and that it is
timber's turn to ride the recovery wave (read 4 Best ETF Strategies for 2013 ).
This is especially true when investors consider the Zacks
Industry Rank for the space. At time of writing, the building and
wood products segment is the top Ranked industry-bar none-that we
are tracking, meaning that no industry has a better estimate
revisions profile than timber right now.
Timber ETF highlights
For more on timber ETFs and how they could be interesting plays
in today's economic environment, watch our short video below on the
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. Click to get this free report >>GUGG-TIMBER (CUT): ETF Research ReportsISHARS-DJ HO CO (ITB): ETF Research ReportsISHARS-SP GL TF (WOOD): ETF Research ReportsSPDR-SP HOMEBLD (XHB): ETF Research ReportsTo read this article on Zacks.com click here.Zacks Investment
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