We recently compiled a list of the 12 Best Land and Timber Stocks to Buy According to Analysts. In this article, we are going to take a look at where Rayonier Inc. (NYSE:RYN) stands against the other best land and timber stocks.
The Land and Timber Sector: Current Trends and Future Outlook
The land and timber sector plays a vital role in both economic and environmental contexts. This sector not only provides essential materials like wood and paper but also significantly contributes to job creation and economic stability. The sector creates direct jobs, along with additional indirect and induced employment opportunities across various sectors such as logging, transportation, and manufacturing.
According to the American Forest and Paper Association, the forest products industry in the United States employs about 925,000 people directly. Additionally, it supports over 2 million jobs indirectly. This industry ranks among the top ten manufacturing employers in 43 states and contributes roughly 5% to the overall manufacturing GDP of the country.
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This sector encompasses activities related to forestry, logging, timberland management, and the production of wood products. It includes various processes such as harvesting trees, sawing logs into timber, and manufacturing wood-based products like furniture and paper. Timber companies play a vital role in managing forests sustainably. There is a growing shift towards more sustainable forestry practices and increased investment in timberland as an asset class. This trend is driven by a growing awareness of the environmental benefits of forestry. As consumers become more environmentally conscious, there is an increasing preference for products sourced from responsibly managed forests.
Another significant trend is the expansion of timber’s role in construction. With a focus on reducing carbon footprints, many builders are turning to timber as a renewable alternative to traditional materials like steel and concrete. Timber’s versatility allows it to be used in various applications, from residential homes to commercial buildings. Additionally, advancements in technology are streamlining operations within the industry, making logging and processing more efficient while minimizing environmental impact.
The J.P. Morgan Asset Management Timberland Outlook for 2024 indicates that cash yields and value growth for timberland assets are expected to grow, driven by housing and lumber demand. This trend is expected to continue into 2025 as interest rates gradually decline, making homes more affordable. Despite a slowdown in global saw timber demand in 2023 due to weaker economic activity in China and rising US interest rates, housing starts in the US remained robust. The ongoing shortage of homes, combined with low existing home sales, has increased the need for new construction.
Looking ahead, J.P. Morgan Asset Management anticipates strong cash yields from timberland assets, with prices and yields expected to rise further in 2025 and beyond. As the demand for sustainable investments grows, timberland is seen as a valuable asset class that can provide both economic benefits and contribute to climate solutions.
Methodology
To compile our list of the 12 best land and timber stocks to invest in according to analysts, we reviewed financial media reports and consulted various online resources including timber ETFs. We focused on the top land and timber stocks that analysts believe have the most potential for growth. We ranked the 12 best land and timber stocks to invest in based on their average price target upside potential according to analysts as of December 27, 2024.
Additionally, we mentioned the hedge fund sentiment surrounding each stock, which was taken from Insider Monkey’s Q3 2024 database of 900 elite hedge funds.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Aerial view of Timberland Real Estate Investment Trust’s woodlands in the U.S. South and Pacific Northwest.
Rayonier Inc. (NYSE:RYN)
Average Price Target Upside Potential According to Analysts: 21.86%
Number of Hedge Fund Holders: 19
Rayonier Inc. (NYSE:RYN) is a prominent timberland real estate investment trust (REIT) that specializes in managing forests and land resources. The company manages approximately 2.7 million acres of timberland across the US South, US Pacific Northwest, and New Zealand. The company has positioned itself in some of the most productive softwood timber markets. Rayonier Inc. (NYSE:RYN) ranks among the best land stocks to invest in.
In the third quarter of 2024, the company reported a net income of $28.8 million and revenues of $195 million. This reflects an increase in net income from $19.2 million in the same quarter last year, although revenues decreased from $201.6 million. Rayonier Inc. (NYSE:RYN) achieved an adjusted EBITDA of $71.8 million. Adjusted EBITDA was down 9% compared to Q3 2023, mainly due to a lower contribution from the company’s New Zealand Timber segment. Despite macroeconomic challenges that continue to adversely impact the company’s timber businesses, Rayonier Inc. (NYSE:RYN) delivered solid operational results.
Additionally, Rayonier Inc. (NYSE:RYN) is actively pursuing a $1 billion disposition initiative aimed at enhancing shareholder value and reducing leverage in a challenging economic environment. In November 2024, the company announced completed and pending timberland dispositions totaling approximately 200,000 acres for about $495 million. These sales include properties in Southeast Oklahoma and Washington’s Olympic Peninsula, demonstrating Rayonier Inc.’s (NYSE:RYN) strategy to divest less strategic assets while focusing on markets with stronger cash flow potential.
The company has successfully completed or announced pending timberland dispositions totaling $737 million since launching its initiative to enhance shareholder value in November 2023. This proactive approach allows Rayonier Inc. (NYSE:RYN) to improve its competitive positioning and long-term growth profile.
Overall, RYN ranks 7th on our list of the best land and timber stocks to buy according to analysts. While we acknowledge the potential of RYN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than RYN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.