Tuesday, September 12, 2006

Plum Creek Timber Takes it on the Chin, Temporarily

You've gotta love the way investors react to analyst downgrades. Depending on the particular analyst and downgraded company, this situation can create short-term buy opportunities especially in quality companies. We are not short-term traders here at Cheap Stocks, but we know a temporary market inefficiency when we see it.

Look no further than Plum Creek Timber (PCL), which was downgraded today by Morgan Stanley to "underweight" from "equal weight". Excuse me? What does that mean? Well, it meant something to Mr. Market who proceeded to punish Plum Creek, dropping the stock more than $3.00 at one point in today's trading to $31.21. Cooler heads prevailed, and the stock closed at $33.51, down $.79.

We are still interested in Plum Creek's 7.8 million acres of land, and 4.7% yield, and continue holding the shares. Thank you Wall Street analysts, for continuing to create market opportunities.

Prior Plum Creek Research:

*The author has a position in this stock. This is neither a recommendation to buy or sell this security. All information provided believed to be reliable and presented for information purposes only.

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