The recent market volatility has not been kind to companies that dig stuff out of the ground.

Oil and gas equities have been flattened. Senior gold stocks are down to their lowest levels in more than a decade (or in Barrick Gold Corp.’s case, two decades). Coal equities have been slaughtered to such a degree that they barely register anymore.

But there is one group of resource stocks that emerged from the carnage with nary a scratch: Forestry.

Many Canadian investors would not have guessed that, treatment because they barely follow these companies anymore. The industry, once a titan in Canada’s capital markets, was devastated by various high-profile crises over the last decade: the soaring loonie, the softwood lumber dispute, the American housing crash and British Columbia’s mountain pine beetle, to name a few.

While investors moved on to more sexy companies mining gold or bitumen, Canadian forestry firms restructured and consolidated into much stronger entities. They have quietly been on an acquisition binge over the last year, buying mills across the U.S. and generating ever-larger piles of cash.

Market conditions, currently so weak for energy and mining companies, are turning the right way for forestry. U.S. housing starts are gradually recovering from their historic lows a few years ago. China demand for Canadian forest products keeps going up, even as it cools for our oil and metals. Timber prices are rising.

And the recent drop in oil prices and the Canadian dollar has been an added gift to the forestry sector. It is a complete reversal from a decade ago, when rising currency and energy costs did so much damage to the business.

I think the sector that probably benefits the most from a stronger U.S. dollar and weaker oil prices is the trees
“I think the sector that probably benefits the most from a stronger U.S. dollar and weaker oil prices is the trees,” said John Duncanson, an independent forest analyst.

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