Wood Stocks: A Look a Lumber Companies for Arbor Day

Joel Anderson |

Wood Stocks: A Look a Lumber Companies for Arbor Day Finally!  The one day a year that we get to celebrate...wood. Well, trees, to be accurate. Today is Arbor Day, the day on which people are meant to gather to care for and celebrate trees. The holiday dates back to April 10, 1872 when an estimated one million trees were planted. The holiday originated in Nebraska City, NE, which might seem odd to anyone who has driven through Nebraska as there doesn't appear to be anything growing there aside from corn.

However, what better way to celebrate Arbor Day than to explore those companies that make their money from trees. Granted, most of these companies either profit from cutting down trees or making things out of dead trees, which would, in fact, make them wildly inappropriate for today, but lets not split hairs!

Lumber Stocks

Lumber is not the industry that it used to be. There was once a time when lumberjacks with hand tools clear cut the majority of American forests, providing the lumber for a growing nation to continue expanding. Today, better forestry and a desire to preserve natural resources for future generations have fundamentally changed the approach to logging undertaken by American timber companies. That does not mean, though, that America suddenly lost its demand for lumber. As such, debates over safe forestry practices and sustainability have become a major part of the industry.

There remain a number of companies that are primarily dedicated to harvesting timber for commercial uses. The Weyehaeuser Company (WY) operates out of Los Angeles, CA and has a market cap of over $11 billion. Formerly the Weyehaeuser Timber Company, Weyerhaeuser was founded in 1900 by Frederick Weyerhaeuser and 15 partners and today operates on four continents. Today, it's primarily a pulp and paper company, but it remains the second largest owner of timberland in America behind Plum Creek Timber Co. (PCL), which is also the largest private landowner in the country.  Other major timber companies include the Potlach Corporation (PCH) and Rayonier (RYN).

If you're looking to invest in the lumber industry without getting to specific, though, there are at least two major ETFs to that effect. The iShares S&P Global Timber & Forestry Index Fund (WOOD) and the Guggenheim Timber Index (CUT).

Lumber Uses

The use of wood in the United States comes in several forms, including pulp for paper manufacture, plywood, and wood fibers for wallboard and insulation. However, the most obvious remains construction, with companies like Jacobs Engineering Group (JEC) and Fluor Corporation (FLR) among the largest. However, global forest products companies like AbitibiBowater (ABH) or Domtar Corporation (UFS) have more diversified uses for wood, making a range of wood pulp and fiber based products that can include everything from newsprint and specialty or coated paper to packaging paper and adult incontinence products.

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