Potlatch Corp (NASDAQ:PCH)

Lumber companies should do well with housing picking up

Time to get back in to the housing market. I think things are finally starting to look up. The trend seems here to stay.

Time to buy some timberland for about $1000/acre.

yes

Like my grandfather always told me, "Land is the best investment because they're not making any more of it." Granted he died before they started making islands in Dubai, but his advice was not lost on me. I like this trust because it holds 1.5 million acres of timberlands. Basically, you get paid to own land. I'd be foolish enough to buy this investment even if it paid no dividend and didn't make money off the timber... So to get paid to own land that will appreciate (I'm in the inflation camp) in my opinion is a no brainer. We'll see how it works out. I'm hoping for a near term drop so I can scoop up some real world shares for myself.

Peak Lumber
http://www.minyanville.com/businessmarkets/articles/lumber-lumber-mills-mountain-pine-beetle/6/23/2010/id/28888?page=full
Hackett cautions that timing an entry into lumber will be a key factor in the equation. He says:

'You will be hearing a lot about this Mountain Pine Beetle lumber infestation issue in the years to come, and I can tell you that when the media starts telling you how bad the situation is for future lumber supply, prices will likely be many times higher than they are today. I expect new all-time highs above $500/1000 bd. ft. to be achieved sometime over the next five years."

Not to mention a steady and current dividend yield of over 6%

Good dividend and under followed by wall street.

it will come back.

Real Estate will see another boom coming. Probably not as big as the last burst, however building supplies will be in demand.

Some dividend payers with a looong market history...

http://stockcharts.com/charts/candleglance.php?PCH,JNJ,CVX,MSFT,PFE,MO,MMM,CALM,WMI,BID|D|D20

...maybe poised for a short-term pop.

Mr. Covey CEO just pulled off a very hard split of this REIT! The IRS allowed this. PCH now has only a tiny Non-Union operation tied to this million acre forest products company. He bit the big one on the purchase of overpriced real estate in central Idaho in hopes of making big in the resort community of McCall, Idaho which has since dropped 50%.

Gone are the reponsibilities of Idaho's largest polluter (Clearwater Foerst Products) now a free standing consumer products company with absolutely no land base for resources or any cash to reinvest into its infrastructure. The only asset left is the employee retirement fund which will most likley be auctioned off by order of a bankruptcy judge in the future to retool the place as time goes on. Add to the fact that now PCH, the regions largest harvester of wood products, can now charge whatever price it sees fit for raw materials to Clearwater Forest Products. With fees being charged to recreate on REIT property, gone soon is the need for Mr. Covey to manage Factorys and employees to meet yearly State property tax assessments.

Potlatch has an excellent portfolio of timberland, and is positioned to profit from increased demand for lumber and paper, as well as related forest products. All this, plus they have a great balance sheet.

Pch will do well in the next four years

PCH is trading at a 25% discount to its intrinsic value. Nice growth potential.

lumber assets valued at much less than it's competitors on a per acre basis. This one is cheap.

Timber REITs will always move up. Always.

Cheap, cheap, cheap. Divide market cap by acreage. Although not as cheap as PCL (per acre), this ones still a winner. Just stole 76000 high-value acres in Wisconsin for 65 million. A nice manufacturing operation as well. Towel and tissue is always in demand, especially "private label" generics these guys make. Huge dividend, too.

Dividend Yield > 2%
Return on Equity > 5%
Positive Earnings Surpris in the past 90 days
Did not lag the S&P in the past 52 weeks and the past 13 weeks

One of the six land management companies using the Pinchot program.