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Interest in timber REITs growing

According to Investor’s Business Daily, shares of Potlatch, Plum Creek and Rayonier recently logged 52-week highs. Weyerhaeuser shares are up 52% from a year ago, but most of its 16% year-to-date gain was logged prior to its first-quarter earnings report on Jan. 25, which was boosted by a one-time land sale.

Shares of all four companies are up 16% to 21% year-to-date with Potlatch on the high end and Weyerhaeuser on the low end of the range.

Some analysts worry that the stocks have gotten ahead of themselves with positive expectations for a continued housing recovery already priced in.

Take Weyerhaeuser. “We’ve got their earnings doubling from 52 cents to $1.07 this year and $1.34 next year. It’s just that (gains) are already priced into the stock,” said analyst Steven Chercover of D.A. Davidson.

Still, he and other analysts expect timber REITs to keep feeding off the recovery as new-home starts climb and demand grows for their products.

Spending on single-family construction in the U.S. rose 4.3% in February vs. January, according to a Commerce Department report on Monday. And permits requested for future home construction jumped at the fastest pace in more than four years.

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