"With its strong balance Plum Creek Timber (NYSE: PCL) will be able to weather the real estate storm," says growth and income expert Stephen Leeb in The Complete Investor. Here is his look at the timber play.
"Plum Creek, which was added to our model portfolio in November, is the largest and most geographically diverse private landowner in the U.S. and owns more than 7.4 million acres of timberlands in the Pacific Northwest, the South, and the Northeast.
"It also owns and operates wood products manufacturing facilities in the Northwest. While residential construction is weak, prices still are strong in some of the company's segments, such as pulpwood.
"And long-term opportunities outside of the housing market are abundant: Plum Creek is developing its non-timber natural resource business and also aims to serve emerging wood-based renewable energy markets.
"To protect value, the company plans to continue to defer harvests in 2009 along with reorienting its land focus from weaker to stronger markets.
"Its strong balance sheet and about $370 million in cash as of the end of fiscal 2008 give it the wherewithal to weather the real estate storm.
"The company has been repurchasing its shares, and in 2008 the number of shares outstanding decreased by about 3.7%.
"As of year-end 2008, the company had approximately 166 million shares outstanding and $137 million remaining under its current repurchase authorization.
"While buybacks probably won't continue at the same pace as last year, we think the dividend is safe and that the resilient value of Plum Creek's assets provides a good floor to its valuation."
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