Even after the large run-up in price, PCL remains a core long-term holding, IMO. Despite its US focus, PCL is a bona fide play on The Global Demographic Tailwind via the increasing importance of wood exports to China and the use of biomass “waste” for power generation. I no longer have a specific price target because I think PCL is the kind of stock you hold forever.
If inflation ever returns in a big way (all that easy money has to have some effect eventually), timberlands are a fine inflation hedge. In the meantime, you get an ample tax-advantaged dividend with plenty of opportunity for one or more dividend hikes in the next few years.
The drop in the share price on Tuesday following the quarterly earnings report is something that happens with regularity because many analysts and investors don’t understand the company well enough to know what’s important and what’s not. In this instance, PCL sold fewer acres of real estate in 1Q13 than analysts were expecting, which lowered the “cash flow from operations” in the analysts’ models. Of course, land has a long shelf life, so any acres not sold in a given quarter are available for sale later, but the analysts don’t seem to comprehend this point.
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