Seeking Alpha: Plum Creek Timber Getting A Little More Respect

As Top Ideas go, my September 2013 call on Plum Creek Timber (NYSE:PCL) has been a dog. The stock is up from that initial report, but investors would have much better with Weyerhaeuser (NYSE:WY) or Potlatch (NASDAQ:PCH), let alone any number of stocks outside of the timber space. If there's a silver lining, it's that this dog has fewer fleas now, as the shares have rebounded more than 10% off the October 2014 low and continue to offer a decent yield.

This coming year is not likely to be dramatically better. Plum Creek's management is looking for growth in housing starts, but new household formation remains worryingly low and new opportunities like wood fuel pellets are not going to create major dislocations in the demand for pulpwood. On a more positive note, the public market valuations of companies like Plum Creek are starting to better reflect the value of timberlands indicated by actual transactions and management has expressed a willingness to sell non-core timberland at the higher private values and use the funds to repurchase shares below net asset value.

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Plum Creek Timber Getting A Little More Respect

Seeking Alpha: The Wait At Plum Creek Timber Stretches On

The housing recovery thesis has fractured this year, with some housing/construction names doing relatively well and others faring pretty poorly. For the timber companies (Weyerhaeuser (NYSE:WY), Rayonier (NYSE:RYN), Potlatch (NASDAQ:PCH), and Plum Creek (NYSE:PCL)), it hasn't been a great time as sawlog prices have yet to really recover and opportunities to sell land to real estate developers are still relatively limited. While it may be true that patience on Plum Creek will pay off and that management is making a good decision by reducing harvest levels over the near term, it's not going to encourage most investors to reconsider the shares today.

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The Wait At Plum Creek Timber Stretches On

Seeking Alpha: Plum Creek Timber Biding Time

The wait for Plum Creek Timber's (PCL) realization of value from its timber assets drags on. These shares bounced up for a little while after my Top Idea write-up in September 2013 ("Patient Investors Get A Crack At Plum Creek Timber"), but declined sharply on the announcement of the acquisition of MeadWestvaco's (MWV) timberland and the concomitant equity offering. Matters were helped little when the company followed that up in January of 2014 with a weak guide for 2014 EPS on lower land sales.

Plum Creek shares have long traded at premiums to Weyerhaeuser (WY) and Rayonier (RYN) (at least on an EBITDA basis), but investors seem to be tiring of the wait for a sustained recovery in housing construction and demand for sawlogs in the southern U.S. For what small consolation it offers, it doesn't appear that Plum Creek's issues are all company-centric, as Rayonier and Potlatch (PCH) have declined by similar amounts since September and Weyerhaeuser is also in the red for that period.

I remain bullish on the long-term value of these shares, but I realize that a "be patient, it gets better" call is not the most compelling call to make, particularly with the shares trading around 19x 2014 EBITDA. A clean 2014, with higher harvest volumes and better prices, would be welcome, but patient investors can still find a lot of value in the company's substantial timberland holdings, real estate development potential, and possible biomass energy play.

The complete article is here at Seeking Alpha:
Plum Creek Timber Biding Time

Seeking Alpha: Patient Investors Get A Crack At Plum Creek Timber

Timberland investing has become one of the more popular "open secrets" of institutional investing - numerous papers have been published comparing the long-term value and performance of investments in timberland to other asset classes, and timberland has often come out looking quite good. Not surprisingly, that has led to institutional dollars flowing into the asset class, leading to quite a bit of volatility in the price (or value) per acre of this class of real estate.

While investing in timberland itself is not very easy for the average investor, REITs like Plum Creek Timber (PCL) offer an appealing alternative. While Plum Creek (and comparables including Weyerhaeuser (WY), Rayonier (RYN), Deltic (DEL), and Potlatch (PCH)) are not pure plays on timber (many of them produce wood-based products and/or sell off lands for real estate development), they're as close as most investors will find, and the popularity of timber as an asset class has generally kept these shares well-valued.

Financial writers often talk about "waiting for a pullback" before buying a stock, and Plum Creek looks like it's offering just that sort of opportunity. With U.S. housing and real estate on the mend (albeit slowly), more lumber going to China, and new opportunities for wood like fuel pellets, Plum Creek's long-term value looks solid. Even so, the shares are down sharply from the May 2013 high and flat for the year. Assigning an objective fair value to Plum Creek may be like nailing Jell-O to a tree, but I would argue that the shares are worth at least $54 today which, in combination with a nearly 4% dividend yield, makes this a stock worth consideration today.

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Patient Investors Get A Crack At Plum Creek Timber

Investopedia: Rayonier Not Really An Income Play On A Housing Recovery

Inexperienced income investors often see the word “REIT” and think it's a sure ticket to good income growth. That's not always the case, though, and Rayonier (NYSE:RYN) is case in point. Although I do believe Rayonier will see improving demand for the output of its timberlands, not all of the company's earnings are shielded by its REIT status and investors may well find that the market has already more than anticipated the business improvements to come from the housing recovery.

Please read more here:
http://www.investopedia.com/stock-analysis/070313/rayonier-not-really-income-play-housing-recovery-ryn-wy-pcl-pch-bki.aspx

Investopedia: Weyerhaeuser Already Anticipating The Turn

Maybe, just maybe, there are finally some signs of life in the U.S. residential construction market. Companies like Illinois Tool Works (NYSE:ITW) have seen some inklings of recovery and investors are slowly getting more optimistic. Be that as it may, though, shares in Weyerhaeuser (NYSE:WY) have already jumped more than 25% in the past couple of months on this improving outlook and that has taken a lot of the undervaluation out of the stock.

A Surprisingly Strong Fourth Quarter
Weyerhaeuser's fourth quarter results were actually pretty positive in a lot of respects. Total revenue did drop 3% from last year and about 2% from the prior quarter, but they nevertheless came in a little better than expected. Although the large wood products segment saw revenue fall 14% sequentially, cellulose fiber, real estate and timberlands were all up sequentially.


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http://stocks.investopedia.com/stock-analysis/2012/Weyerhaeuser-Already-Anticipating-The-Turn-WY-PCL-RYN-PCH-PG0208.aspx

Investopedia: Plum Creek Timber Looks For The Bottom In 2012

Conditions in the timber industry haven't been getting better with any particular speed lately. Although multi-family housing construction is extremely strong, the single-family building and residential real estate development markets, that are so important to Plum Creek (NYSE:PCL), went basically nowhere in 2011. Although most analysts expect 2012 to be the low for the cycle, investors may yet want to ask themselves if Plum Creek is the way to play the eventual rebound.

A Decent Fourth Quarter, Relatively Speaking  
Fourth quarter results were not that great for Plum Creek, but there was no particular expectation that they would be. Reported revenue dropped 12% as a 38% growth from the Northern business and 14% growth in manufacturing partially offset a 4% decline in Southern and a 40% decline in revenue from real estate operations.

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http://stocks.investopedia.com/stock-analysis/2012/Plum-Creek-Timber-Looks-For-The-Bottom-In-2012-PCL-RYN-WY-LPX0203.aspx

Investopedia: Plum Creek Timber Is Still A Little Warped

Timberland may be a great investment class, but it does not automatically follow that Plum Creek Timber (NYSE:PCL) is a great investment at any and all times. While these are indeed still down days for the residential building market (a major consumer of timber from saw logs) and real estate in general, Plum Creek is not looking all that cheap. Such is the dilemma when investors fully buy into the underlying soundness of a company's core business. 

Some Good, But More Bad in Q2 Results  
Plum Creek surpassed analyst expectations for second quarter revenue growth, but the company's 10% growth was bulwarked in large part by real estate sales. Timber revenue fell 5%, while revenue from timberlands sold for real estate jumped 84%. Sawlog volume was weak in general - hurt by bad weather in the Northwest and good weather in the South (which pressured prices and led Plum Creek to hold off on harvests). Prices were higher for Northwest products and lower for Southern, and the company saw more than one-quarter of its Northwest harvest go to China.

To read the complete piece, please click below:
http://stocks.investopedia.com/stock-analysis/2011/Plum-Creek-Timber-Is-Still-A-Little-Warped-PCL-RYN-WY-UFPI-LPX-RKT-PKG0730.aspx

(Repost) Investopedia: Looking For Reorientation On Louisiana-Pacific

Several years after the rupture of the housing market, there is still no joy among the companies that supply building materials. True, many product markets have stabilized, but investors rarely get very excited about "less worse". As a leading supplier of an increasingly popular building material, Louisiana-Pacific (NYSE: LPX) should see a very strong rebound in margins and stock performance when homebuilding picks up, but the stock could be dead money until and unless that happens. (For more, see 8 Signs Your Neighborhood Is On The Upswing.)


Q1 Results - Good, Bad and Ugly
Investors were not overly thrilled with LPX's first quarter results, as the company's loss was quite a bit worse than analysts had forecast. It was not all bad news, though.

Revenue rose 12% this quarter versus a year ago, mostly on the strength of siding and oriented strand board (OSB). Given that housing starts dropped about 10% during the first quarter versus the year ago quarter, that is a pretty impressive performance. In OSB (oriented strand board), LPX saw 18% volume growth as more and more builders choose OSB over plywood. 



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http://stocks.investopedia.com/stock-analysis/2011/Looking-For-Reorientation-On-Louisiana-Pacific-LPX-WY-UFPI-RYN-PCL0512.aspx

Taking Multiple Cuts At Plum Creek

These are strange times for companies trying to operate in the timberland industry. Although timberland theoretically offers the advantage of allowing companies to sit tight and literally let their assets grow, the reality for public companies is the expectation of ongoing dividend payments and growth that necessitates active management. As one of the go-to names in the timber business, Plum Creek (NYSE:PCL) is a mixed bag of good and bad news for investors today.

The Quarter That Was
Expectations were not all that high for the third quarter, but Plum Creek disappointed nevertheless. Performance in the actual timber business was not too bad - sawlog prices were higher than in the year-ago period, although still not at a level that is all that attractive. Due in part to uninspiring market conditions, then, Plum Creek has pulled back on its harvest levels.

The bigger issue, though, was in the real estate business. Not surprisingly, demand for land for housing remains weak and revenue and operating profits tied to real estate sales have dropped precipitously, draining away a high-margin source of business. Due in part to the ongoing slump in real estate, Plum Creek took down numbers for the fourth quarter. 


Please see the link below for the full piece on PCL:
http://stocks.investopedia.com/stock-analysis/2010/Taking-Multiple-Cuts-At-Plum-Creek-PCL-RYN-WY-DEL-PCH-IP1027.aspx

Plum Creek Gets Pruned

I wrote the following on Plum Creek (PCL), one of my favorite REITs and a stock I wish I had just held on to instead of sold a long time ago...
http://stocks.investopedia.com/stock-analysis/2010/Plum-Creek-Gets-Pruned-PCL-WY-RYN-IP-NP0430.aspx

Memo to Plum Creek Timber (NYSE:PCL) management - in the future, try not to post earnings on the same day that western Europe appears to be melting down into the financial Stone Age. 

That would be the most logical explanation to this writer, as to why the stock is down nearly 8% (as of Tuesday's close), on earnings that were at least acceptable. Still, whenever the stock of a high-quality company goes down more than it should in the absence of truly bad news, I get a little interested.  

For the rest, click on through: 
http://stocks.investopedia.com/stock-analysis/2010/Plum-Creek-Gets-Pruned-PCL-WY-RYN-IP-NP0430.aspx