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Zacks Industry Rank Analysis

Jumping up Zacks Industry Ranks in response to revitalized real estate demand.

Sitting just last week at #192 on the Zack’s Industry Rank list, strong recent demand for building materials --and upgrades to earnings estimate revisions that followed-- pushed key players in the timber industry back into the spotlight.  

This week, the Building Products/Wood Industry enjoys a Zack’s Industry Rank of #32.

Within the Building Products/Wood Industry of eight companies, there have been 5 recent positive revisions to annual earnings estimates and 0 negative revisions.  Positive estimate revisions have been averaging +15%.  Admittedly, there are also a couple of sour earnings surprises to report too.

Construction benefits directly from strong home construction volumes and rapidly improving home prices.  Industrial, Retail and Commercial demand for building products and wood has rebounded smartly too.

Given the diverse sources in market demand for these products, there’s reason to believe demand trends will continue to provide positive revenue growth support and further upward earnings estimate revisions. More favorable activity by the sector’s analysts should follow.

Sudden upward Zacks Rank company movement within a group, moving from a Hold to either a Buy or Strong Buy rank is important.  It reflects fresh earnings estimate activity a savvy investor can take advantage of. Glance over the brief descriptions of our two Q4 earnings surprise candidates.  Each was selected based on its current Zacks Rank #1 and the recent magnitude in positive earnings surprises.

Note:  Q1-13 quarterly reporting arrives for both of these companies the third week of April.

Plum Creek Timber (PCL - Analyst Report)

PCL is a Zacks Rank #1 (Strong Buy).  It moved up from a hold just last week.  This publicly-held timber REIT reports quarterly earnings on April 29, 2013.

The lumber, plywood, and medium density fiberboard (MDF) producer offers an annual cash dividend of $1.68 which yields a nice 3.2% return, and showed us a recent +69% Q4 earnings beat. Plum Creek Timber is the second largest private timberland owner in the United States, with approximately 7.8 million acres of timberlands located in 19 states. Their timberlands are well diversified, not only by species mix, but also by age distribution.

Weyerhaeuser Co (WY - Analyst Report)

WY is a Zacks Rank #1 (Strong Buy). It was bumped to its #1 rating within the last week. It reports earnings on April 26, 2013.

The producer surprised on its Q4 EPS with a +37% beat.

Weyerhaeuser Company is principally engaged in growing and harvesting timber; the manufacture, distribution, and sale of forest products; real estate development and construction; and other real estate related activities. Its business segments are timberlands; wood products; pulp, paper and packaging; and real estate and related assets.

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