What to Buy: Norbord Inc (TSX: NBD, OTC: NBRXF)

Why to Buy Now: Toronto-based Norbord Inc (TSX: NBD, OTC: NBRXF) primarily manufactures oriented strand board (OSB), a key material involved in homebuilding.

The company is among the OSB market leaders in US and Europe, and is leveraged to the continuing North American real estate recovery. But its shares have sold off over the past year due to a deteriorating financial performance.

However, analysts forecast that earnings will rebound by 120 percent next year, so the stock’s near-term swoon affords us an opportunity to purchase shares at an attractive price–currently down about 28 percent from last year’s high–before the market catches on.

The CAD1.4 billion company has a solid balance sheet and considerable institutional support: Infrastructure giant Brookfield Asset Management Inc (NYSE: BAM) currently holds 52.1 percent of shares outstanding.

Norbord trades on both the US over-the-counter (OTC) market as well as the Toronto Stock Exchange (TSX). While we always recommend using a buy limit when purchasing new positions, it is especially important to do so if you intend to pick up shares on the OTC, as the average daily trading volume over the trailing three-month period was just 2,100 shares per day.

With shares currently yielding 8.9 percent, Norbord is a buy below USD26. Set your limit order slightly below the market price to ensure you don’t overpay for shares of this thinly traded stock.