5 Best Land and Timber Stocks To Buy

In this article, we discuss 5 best land and timber stocks to buy. If you want to see more stocks in this selection, check out 12 Best Land and Timber Stocks To Buy. 

5. Texas Pacific Land Corporation (NYSE:TPL)

Number of Hedge Fund Holders: 17

Texas Pacific Land Corporation (NYSE:TPL) is involved in land and resource management, as well as water services and operations. While it may be tempting to classify Texas Pacific Land Corporation (NYSE:TPL) as an oil sector company, it is undeniably a land-focused enterprise. Approximately 6% of TPL’s annual returns stem from the increase in the overall value of the land and the effective land-sale/share-repurchase initiative, which helps prevent dilution. Funding for share repurchases is partially generated through revenue from leasing activities, oil and gas royalties, as well as sales of water and minerals. It is one of the best land stocks to invest in. 

On May 22, Stifel maintained a Hold rating on Texas Pacific Land Corporation (NYSE:TPL) and lowered the firm’s price target on the shares to $1,378 from $1,399. This adjustment was made after revising estimates for TPL’s reported annual results and taking into account updated guidance provided by different companies covered under Stifel’s Americas mineral interest MLPs coverage.

According to Insider Monkey’s first quarter database, 17 hedge funds were bullish on Texas Pacific Land Corporation (NYSE:TPL), compared to 20 funds in the earlier quarter. Murray Stahl’s Horizon Asset Management is the largest stakeholder of the company, with 1.4 million shares worth $2.4 billion. 

Wedgewood Partners made the following comment about Texas Pacific Land Corporation (NYSE:TPL) in its Q1 2023 investor letter:

“Texas Pacific Land Corporation (NYSE:TPL) was a top detractor to performance during the quarter. Also, early in the quarter we trimmed our weighting after the stock’s remarkable run in 2022. The Company’s royalty interests span over 880,000 acres in West Texas. Most of this land is located in the highly productive Delaware Basin of the Permian Basin. Although oil and gas prices will always be volatile over the short term, we expect development activity on the Company’s acreage to continue to grow at a rapid pace, primarily driven by both domestic and multinational producers looking to maximize returns on increasingly scarce oil and gas capital expenditures.”

4. Simpson Manufacturing Co., Inc. (NYSE:SSD)

Number of Hedge Fund Holders: 17

Simpson Manufacturing Co., Inc. (NYSE:SSD) specializes in the design, engineering, manufacturing, and sale of wood and concrete construction products. Their product offerings include a range of wood construction products such as connectors, truss plates, fastening systems, shear walls, and pre-fabricated lateral systems for use in light-frame construction. Additionally, it offers various connectors and supplementary items for wooden framing, timber and offsite construction, structural steel construction, and applications involving cold-formed steel. It is one of the best land and timber stocks to monitor. 

On April 27, Simpson Manufacturing Co., Inc. (NYSE:SSD) declared a $0.27 per share quarterly dividend, a 3.8% increase from its prior dividend of $0.26. The dividend is payable on July 27, to shareholders of record on July 6. 

Baird analyst Timothy Wojs increased Simpson Manufacturing Co., Inc. (NYSE:SSD)’s price target to $140, up from $125, while maintaining an Outperform rating on the shares. The analyst noted that Simpson Manufacturing Co., Inc. (NYSE:SSD) had a strong quarter and raised their full-year EBIT guidance, which could potentially exceed expectations and result in a significant boost to our estimates.

According to Insider Monkey’s first quarter database, 17 hedge funds were bullish on Simpson Manufacturing Co., Inc. (NYSE:SSD), compared to 20 funds in the earlier quarter. John W. Rogers’ Ariel Investments is the largest stakeholder of the company, with 629,419 shares worth $69 million. 

Heartland Opportunistic Value Equity Strategy made the following comment about Simpson Manufacturing Co., Inc. (NYSE:SSD) in its Q4 2022 investor letter:

“These are companies like Simpson Manufacturing Co., Inc. (NYSE:SSD), which designs and manufactures connectors and fasteners used in new construction.  Simpson dominates the domestic wood connector market, controlling roughly 75% share thanks to the company’s high value add. If a structural connector fails, the building is uninhabitable, yet Simpson products typically account for <0.5% of a building’s construction cost. As a result, the company enjoys pricing power and a long-term median operating margin (earnings before interest and taxes, or EBIT, divided by sales) of 17%, versus 12% for its Building Product industry peers. But the stock was down around 45% through late October, as investors grew concerned about a housing recession. Simpson’s earnings will be down significantly in 2023; however, we believe the stock is undervalued relative to normalized earnings. Longer term, the rise in building code requirements should result in more demand for SSD connectors per unit of construction.

When we purchased SSD, the stock was trading at a price/earnings ratio of around 12 based on forecasted earnings over the next 12 months. That was well below Simpson’s long-term median valuation of 21 times earnings. Today, the shares are trading at 16 times earnings for the next 12 months, after analysts cut their fiscal 2023 forecast by around 20% since the end of the third quarter.”

3. The Howard Hughes Corporation (NYSE:HHC)

Number of Hedge Fund Holders: 24

The Howard Hughes Corporation (NYSE:HHC) is involved in the ownership, management, and development of various commercial, residential, and mixed-use properties across the United States. The company operates through four distinct segments – Operating Assets, Master Planned Communities (MPCs), Seaport, and Strategic Developments. Howard Hughes possesses large tracts of land that can be developed over extended periods, spanning decades or even generations. The firm owns land with long-term development potential, making it one of the best land stocks to invest in. 

On October 7, 2022, Piper Sandler analyst Alexander Goldfarb maintained an Overweight rating on The Howard Hughes Corporation (NYSE:HHC) but lowered the firm’s price target on the shares to $81 from $100. 

According to Insider Monkey’s first quarter database, 24 hedge funds were bullish on The Howard Hughes Corporation (NYSE:HHC), compared to 18 funds in the prior quarter. Bill Ackman’s Pershing Square is the biggest stakeholder of the company. 

Bernzott Capital Advisors made the following comment about The Howard Hughes Corporation (NYSE:HHC) in its Q4 2022 investor letter:

“The Howard Hughes Corporation (NYSE:HHC): The real estate developer’s master planned community results were better than expected amid fears of a housing slowdown, and stabilizing interest rates eased pressure on the stock from earlier in the year. Pershing Square, a significant shareholder, tendered to purchase more shares during the quarter, highlighting value.”

2. Louisiana-Pacific Corporation (NYSE:LPX)

Number of Hedge Fund Holders: 30

Louisiana-Pacific Corporation (NYSE:LPX) offers building solutions primarily for the new home construction, repair, remodeling, and outdoor structure markets. The company is involved in multiple aspects of timber production, including timber harvesting, processing, and distribution. Louisiana-Pacific Corporation (NYSE:LPX) sources timber from their own timberlands and other suppliers, ensuring a steady supply of quality wood products. It is one of the best land and timber stocks to invest in. 

On May 4, TD Securities upgraded Louisiana-Pacific Corporation (NYSE:LPX) to Buy from Hold with a price target of $75, up from $63. The firm believes that the margin pressure experienced in the Siding segment, as indicated in the Q1 report, will be temporary. They also consider the management’s Q2 guidance to be conservative. TD Securities expects that Q1 will mark the lowest point for earnings and anticipates that the Siding segment’s excess inventory in the distribution channels will gradually improve in the upcoming quarters. 

According to Insider Monkey’s first quarter database, 30 hedge funds were bullish on Louisiana-Pacific Corporation (NYSE:LPX), and Warren Buffett’s Berkshire Hathaway is the largest stakeholder of the company, with 7 million shares worth $382 million. 

SouthernSun SMID Cap Strategy made the following comment about Louisiana-Pacific Corporation (NYSE:LPX) in its Q1 2023 investor letter:

“We initiated a position in Louisiana-Pacific Corporation (NYSE:LPX) during the quarter. LPX is a leading producer of oriented strand board (OSB) and siding, primarily in North America. In recent years, management has transformed the business from a focus on producing commodity OSB products into a “building solutions” company producing more value-add OSB products and engineered wood siding. The company is organized into two divisions – siding solutions and OSB.

LPX’s siding solutions segment produces a full line of engineered wood siding and related products. These products generally offer for homeowners superior aesthetics and performance properties and, for contractors, reduced labor cost and better ease of installation relative to competing alternatives. In addition, they have superior sustainability characteristics to most other siding substrates. As partial proof of its value proposition and growing market acceptance, LPX siding has grown 60% over the last two years, greatly outperforming U.S. single-family housing starts which grew just 1.4% over these two years…” (Please click here to read the full text)

1. Weyerhaeuser Company (NYSE:WY)

Number of Hedge Fund Holders: 30

Established in 1900, Weyerhaeuser Company (NYSE:WY) is a prominent entity in the timber industry and stands as one of the largest private owners of timberlands worldwide. With its vast holdings, the company possesses ownership or control over millions of acres of timberlands in the United States, while also managing additional timberlands in Canada through long-term licensing agreements. It is one of the best land and timber stocks to invest in. 

On May 12, Weyerhaeuser Company (NYSE:WY) declared a quarterly dividend of $0.19 per share, in line with previous. The dividend is payable on June 16, to shareholders of record on June 2. 

DA Davidson analyst Kurt Yinger upgraded Weyerhaeuser Company (NYSE:WY) on April 10 to Buy from Neutral with a price target of $35, up from $34. The analyst believes that with commodity wood product prices stabilizing at lower levels, there is potential for an upward trajectory. The firm also highlighted that expectations for Weyerhaeuser Company (NYSE:WY) have been appropriately adjusted, and the recent decline in the stock price over the past two months presents an appealing opportunity for investors to enter the market.

According to Insider Monkey’s first quarter database, 30 hedge funds were bullish on Weyerhaeuser Company (NYSE:WY), compared to 29 funds in the prior quarter. Jean-Marie Eveillard’s First Eagle Investment Management is the largest position holder in the company. 

Here is what Third Avenue Management has to say about Weyerhaeuser Company (NYSE:WY) in its Q3 2020 investor letter:

“Third Avenue has long championed enterprises with sound business practices run by aligned control groups that exhibit strong stewardship. Within Third Avenue’s real estate strategy, this oftentimes leads the Fund to “pass” on investments in companies with uncertain environmental liabilities, business models that could be deemed predatory, and corporate governance structures that are stacked against key stakeholders. Consequently, the select-set of real estate and real estate-related business that make it into the Third Avenue Real Estate Value Fund represent some of the true industry leaders in respect to their ESG practices, including Weyerhaeuser, that own more than 16 million acres of timberlands and sequester more carbon than any other privately-held enterprises globally (to our knowledge)— an underappreciated attribute that may ultimately have incremental value through a carbon-credit initiative or even strategic value for larger enterprises seeking to offset emissions.”

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