This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

Weyerhaeuser Surges on Sandy, but Wait for Lower Levels

Stocks in this article: WYLPX

NEW YORK ( TheStreet) -- When it comes to playing the housing recovery, investors have plenty of choices. Home-improvement stores such as Lowe's (LOW) and Home Depot (HD) come to mind.

But even astute investors sometimes overlook the brands that they actually go to Lowe's or Home Depot to buy. Timber maker Weyerhaeuser (WY), headquartered in Federal Way, Wash., is not widely recognized as a household name, but it would be hard to find another company more closely tied to the housing market.

The market has been more inviting to Weyerhaeuser lately, with shares up close to 70% over the past 12 months. Now that the price-to-earnings ratio has reached 34, the stock trades at a valuation that is 15 points and 14 points higher, respectively, than the industry average and sector average.


Weyerhaeuser's resurgence is a surprise for some. But for TheStreet's Jim Cramer, it's par for the course. On Nov. 11, Cramer essentially called the bottom on (among other stocks) Weyerhaeuser when the stock was trading at about $26, or 23% below its recent high.

Cramer cited the destruction of Hurricane Sandy as a possible catalyst for home reconstruction, which would spur increased demand not only for Weyerhaeuser's wood products but also for those of rival companies such as Louisiana Pacific (LPX), which has risen 53% since its November low of $14.72.

Weyerhaeuser, which posted a 25% gain in fourth-quarter revenue, has been an early beneficiary of Sandy. Weyerhaeuser's P/E of 34, 1 point higher than what the company has averaged over the past couple of years, causes concern that the market has already priced in a full housing recovery, especially when looking at Louisiana Pacific's valuation (P/E of 92), five times the S&P 500.

Still, with improving consumer confidence and low mortgage rates, things are looking up for Weyerhaeuser. Home prices rose nearly 10% in January, the biggest increase in almost seven years, a good sign for the company's wood and timberland products.

Better Profitability Offsets Sequential Weakness

Revenue arrived up 31% year over year to $1.95 billion, beating estimates by more than 4%. The performance follows a strong 25% revenue surge in the fourth quarter. But there was also a 2.5% sequential decline in revenue.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,827.75 +12.81 0.07%
S&P 500 2,072.83 +5.80 0.28%
NASDAQ 4,787.3170 +29.0650 0.61%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs