Weyerhaeuser Vs. Rayonier: Which Lumber Stock Is A Better Buy?

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Lumber has recently hit an all-time high due to soaring demand driven by industrial and residential activities. We believe Weyerhaeuser (WY) and Rayonier (RYN) are well-positioned to capitalize on rising lumber prices. 

Weyerhaeuser Company (WY) manufactures and sells forest products. The company operates through three main business segments—timberlands, wood products, and real estate, energy & natural resources. Its wood products segment delivers lumber, structural panels, engineered wood products and complementary building products for residential, industrial and light commercial applications.

Rayonier Inc. (RYN) is a leading timberland real estate investment trust with assets located in some of the most productive softwood timber growing regions in the United States and New Zealand. The company operates through seven segments—Southern Timber, Pacific Northwest Timber, New Zealand Timber, Timber Funds, Real Estate, Trading, Corporate and Other.

The U.S. lumber market has been witnessing a soaring demand since the economy began recovering. Given low inventories, rising demand from industrial and residential activities has caused lumber prices to spike on April 19 to an all-time high of $1,328.50 per thousand board feet. The booming housing market, the country’s anticipated infrastructure developments and home improvement trends should keep driving lumber prices. Indeed, the global reclaimed lumber market size is expected to grow at a 4.6% CAGR  to reach $70.37 billion by 2028.

WY has gained 27.1% over the past three months and RYN surged 18.4%. In terms of their past year’s performance, WY’s 77.3% makes it a clear winner, given RYN’s 39.8% gains. But, which of these stocks is a better pick now? Let’s find out.

Latest Movements

On April 30, WY completed the acquisition of 69,200 acres of high-quality Alabama timberlands from Soterra, a subsidiary of Greif, Inc. (GEF), for approximately $149 million. It also announced the sale of 145,000 acres of timberlands in the North Cascades region to Hampton Resources for $266 million. The company expects to recognize a gain on the sale and anticipates no tax liability in connection  with the transaction. In March, WY  paid a $0.17 per share dividend. RYN paid a $0.27 per share quarterly cash dividend  on March 31, 2021. Earlier in March, the company published its first Carbon Report that highlighted  the positive net carbon impact generated by its  forestry operations. In 2019, its timberland assets sequestered an estimated 5.7 million metric tons of CO2 equivalents from the atmosphere. This shows the company’s commitment to achieving net zero emissions globally.

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