On Friday, I noted that oil and gas giants were diving head-first into building out the new EV infrastructure of charging stations. One side effect of that is to capture carbon credits to either sell or use for their dirtier operations.
Those credits are only a pittance compared to the carbon capture these timberland companies get every year. They are, after all, paid to just plant trees. That’s what they do anyway.
Meaning, if they cut more of their acreage right now, they see their largest returns in history. If they don’t, they still get paid to just sit on what they have.
Companies adding to their portfolios of timberland are the biggest winners here. The more you have right now, the better.
And after a major deal that finally closed last year, one company is taking advantage of this strange win-win situation.
Rayonier Inc. (NYSE: RYN) completed its merger with Pope Resources in May last year to become one of the largest timberland owners and lumber producers in the world.
It has the largest amount of acreage in the U.S. Southeast. But it also has significant assets in the Pacific Northwest and New Zealand, both of which take advantage of huge demand in China for its products.
With aggressive shutdown restrictions in New Zealand last year, about 16% of Rayonier’s acreage and 28% of its annual earnings came offline completely. Its significant acreage in Washington state was also greatly affected as one of the earliest and hardest hit areas of shutdowns.
Still, pro-forma revenue climbed a sizable 10% during 2020 despite these shutdowns. And that’s mostly from before its merger.
Now, the combined company leads the industry with a diverse offering of hard and softwoods, pulp products and those lucrative carbon credits.
Its stock has gone up, as some investors did watch lumber’s rise.
But considering the size of that spike and the bright future ahead of this massive niche play, there’s potential for room to run.
I’ll definitely be watching this space, even if it may seem boring at times compared to more exciting technologies and market swings. I recommend you do too.
To your prosperity and health,
Joshua M. Belanger
Joshua M. Belanger
Joshua Belanger is founder of CounterVest and the editor of Hot Money Trader. He has been providing ordinary investors blockbuster returns since 2008. In 2018, the average return of Hot Money Trader beat the markets by over 15%
Subscribe to Emerging Profits Daily for FREE.
Receive today's top emerging opportunities for tomorrow's profits delivered straight to your inbox.