Weyerhauser the Way to Go - Barron's

Oct.28.07 | About: Weyerhaeuser Co. (WY)

Weyerhaeuser Co. is undergoing a restructuring that could result in big profits for investors in the forest-products giant, Barron's says. Now trading at about $68, bulls believe shares could surpass $100 if a reorganization, such as selling off the company's containerboard business or, most appealing, conversion to a timberland real-estate investment trust, takes place. This, even though fundamentals such as an anticipated 48% in third-quarter earnings offer little to cheer about given the industry's cyclical downturn. Based on the parts of the business, one fund manager who is pushing the company to accelerate the restructuring said the stock was worth $90-$100: "With different engines under the hood, there's a huge amount of value there," he said. Another analyst valued the company's parts at $103/share based on recent industry deals. Converting to a REIT would cut the company's tax liability to 15% from 35%, while the company also has said it is evaluating options for its containerboard, packaging and recycling operations, which could be a stepping-stone to conversion. Others in the business that have made a similar move include Plum Creek Timber and Potlatch.

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