Weyerhaeuser Co. $65 - New York symbol WY

WEYERHAEUSER CO. $65 (New York symbol WY; Conservative Growth Portfolio, Resources sector; Shares outstanding: 217.8 million; Market cap: $14.2 billion; WSSF Rating: Average) is a leading forest products company, with 6.4 million acres of timberland in the United States. It also has 30 million acres of leased timberland in Canada. The company recently agreed to sell its European engineered wood products operations for an undisclosed sum. The sale is part of Weyerhaeuser’s plan to focus on its core North American residential wood products business. It’s now exploring various options for its containerboard and packaging operations. Weyerhaeuser earned $0.55 a share (total $118 million) before unusual items in the three months ended September 30, 2007, down 42.1% from $0.95 a share ($236 million) a year earlier. The slowdown in the housing market has hurt demand for construction products. However, productivity gains improved earnings at its packaging business. Sales fell 8.8%, to $4.15 billion from $4.55 billion. The stock trades at 31.0 times its likely 2008 earnings of $2.10 a share, and at 9.6 times cash flow of $6.80 a share. That seems high, but Weyerhaeuser’s land holdings could be worth $70 a share if it decides to spin them off. The $2.40 dividend yields 3.7%. Weyerhaeuser is a buy.

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