Plum Creek Timber Co., Inc. (NYSE:PCL)

The dividend is nice but even with a rise in commodity prices I can't see a valuation here that makes sense.

Lumber companies should do well with housing picking up

MF stock of the day.

Housing and construction have pretty well bottomed out. PCL won't knock your socks off, but you will get paid pretty well to wait with that 4.4% dividend. This is a great candidate for a retirement portfolio.

12/17

While I'm not crazy about the P/E of 40, I'm even less keen on the market as a whole right now, and timber provides stable value.

Jeremy Grantham points out the advantages of forestry, a renewable resource.

Peter Lynch says, try to find a company that any idiot could run, because sooner or later, that idiot will be running it. So how's this for a business model:

1) Get land.
2) Plant tree on land.
3) Chop down tree; sell tree.
4) Repeat.

I like it. I like the long-term time horizon. I like the moat - could you enter the forestry business as a viable competitor tomorrow? Where's your hectares? Where's your old-growth?

I like everything about it.

It gives a good dividend

The recent desaster in Japan along with other world desasters will put a large demand on timber products. This will be a boon to PCL in the short term followed in the long term by a gradual increase in domestic construction and land development. PCL is the largest owner of undevelpted land in the US

REBUILD JAPAN. GOOD DIVIDEND.

Trees continue to grow adding value as we wait for the housing market to recover. When the housing market gets back to normal, Plum Creek will have a great selection of prime lumber to offer. A decent dividend will we wait.

China owns all our trees soon.

Simply based on the expectation for land prices to rise in the next 5 years.

construction will pick up in a few years. and the lumber needed will be more then ready. canada still has there beatles destroying the forests. and will need to import.

PCL should hold its value and the dividend brings in cash. It will probably not, however, be a big gainer.

Plum Creek has a stable core business in owning timberland because the trees will continue to grow regardless of the economic climate. PCL can also benefit from a recovering housing market with its wood products. Additionally, it can benefit in the popularity of renewable energy because it produces wood pellets and also leases land for wind farms. Even if they decide to do nothing with their timberland the trees will grow making them worth even more, which is great position to be in.

yeilder with raised guidance

Paper, construction and real estate should all outpace the market in the next 12 months.

I have August $35 written puts on PCL to either collect premium income or get the stock a little cheaper.