2. Weyerhaeuser (WY) is a forest-products company, which raises and harvests timber. It also has real estate development operations. It will be structured as a REIT, or real estate investment trust, an entity required to distribute the majority of income to shareholders, at the end of 2010.
Barclays believed that a "multi-year cyclical upturn in demand, prices and profits" began in 2010. Barclays believes the stock trades below the liquidation value of Weyerhaeuser's various assets, rendering it dirt-cheap. Its $29 target suggests 57% upside. Other researchers are more cautious. Five rate the stock "buy." Eight rate it "hold." Three rank it "sell."
1. AMR Corp. (AMR) owns American Airlines. Its stock has risen 2.3% in 2010. Barclays has a positive view of the airline industry, predicting record profitability in 2011. Specifically, it believes AMR has "the best cash flow and incremental earnings potential" among carriers. It expects higher cost reductions resulting from a re-fleeting program and greater cash flow generation than other researchers. It valued AMR's stock using a proprietary option valuation model and generated a target of $18, implying 127% of upside. Risks to this thesis include higher-than-anticipated jet fuel prices and failure to achieve unit cost reductions from re-fleeting.
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