Their 7MM acres of timberland is valued at $1200/acre based on all debt and market value of equity. Recent sales at depressed prices are well above that level. PCL should be viewed as an inflation hedge. The trees grow 6%/ year--that is $2.50/shr per year. The pine beetle does not affect them as it has only killed their non commercial lodgepole pine in Montana. When inflation comes roaring back in 2012, we will thank our lucky stars we own this company. As your grand pappy said, "son they can tax you and fire you but they can never take away your land." If you wanted to own anything today as an inflation hedge, it be your share of 7mm acres.
The pps depends on the per acre value. If $1,200 per acre then after debt I see PCL value at $35 a share; however each $100 more per acre raises the pps by over $4 a share. No wonder the pps goes up and down so often. Solution, buy below $35, hold forever?
Agreed. Another way to think about it is this. PCL has 161.6MM shares outstanding as of June 30, 2010. PCL also owns about 7MM acres of land so that's about .043 acres of land per share. So if you own 100 shares of PCL, you actually own about 4.3 acres of timberland.
For ~$3700, that's not bad! Easier than trying to buy 4 acres of it yourself! =)