Plum Creek Timber Co. Inc. (PCL), Weyerhaeuser Company (WY): Yelling Timber!

Given its wider range of businesses, the company is less of a direct play on lumber prices. Of course, the company still clearly maintains exposure to lumber prices through all of its business lines.

If picking tree-farming stocks isn’t your idea of a good time, then you can consider using one of the various exchange-traded products that have come to market. One choice is the iShares S&P Global Timber & Forestry Index .  The underlying index tracks the 24 largest publicly traded companies engaged in the ownership and management of timberlands, as well as supply chain related activities with respect to lumber.

The fund averages trading volume of 40,000 shares per day. That volume doesn’t scream depth when compared with behemoths like SPDR S&P 500 that trade almost 200 million shares a day, but liquidity is better than you might expect. To wit, the bid-ask spread is only $0.02 (via Fidelity). Last of all, the expense ratio for this fund isn’t the lowest, but at 0.5% it’s quite a bit lower than the average natural resource mutual fund, which is above 1.5%.

The bottom line

In summary, nobody knows if lumber prices have found a bottom. While they could keep falling, I think it’s safe to say that prices are already much lower than where they were earlier this year. If you’ve been following the big picture lumber theme but have been waiting to build a position, now may be an opportunity to start.  Whatever you decide, just be sure to take your positions in moderation and as part of a diversified portfolio appropriate for your needs.

Victor Lai has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

Victor Lai is an investment adviser representative with Bellwether Capital Management LLC, a registered investment adviser. Victor Lai does not own any positions in the securities referenced in this posting. Clients of Bellwether Capital Management LLC may own positions in the securities referenced in this post.  This post is for informational purposes only and does not represent advice. You should conduct proper due diligence and/or consult with professional advisors before taking investment action.

The article Yelling Timber! originally appeared on Fool.com and is written by Victor Lai.

Victor is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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