Weyerhaeuser Co. $53 - New York symbol WY

WEYERHAEUSER CO. $53 (New York symbol WY; Conservative Growth Portfolio, Resources sector; Shares outstanding: 211.3 million; Market cap: $11.2 billion; WSSF Rating: Average) is a leading forest products company. It owns or leases over 30 million acres of timberland in the United States and Canada. As part of a plan to focus on its core lumber operations, the company recently agreed to sell its containerboard, packaging and recycling operations for $6 billion. This division accounts for about a third of Weyerhaeuser’s revenue. The company will use the cash to pay down its long-term debt of $7.0 billion. In the three months ended March 30, 2008, Weyerhaeuser lost $0.24 a share (total $51 million). It earned $0.20 a share ($48 million) a year earlier. These figures exclude unusual items. Revenue fell 22.2%, to $2.1 billion from $2.7 billion, as the slowing housing market has hurt lumber demand. The company will probably lose $0.28 a share in 2008, but earnings should improve to $1.36 a share in 2009. The stock now trades at a high 39.0 times the 2009 estimate. However, Weyerhaeuser’s vast timberlands are an over-looked asset. The $2.40 dividend still seems secure, and yields 4.5%. Weyerhaeuser is a buy.

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