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For Your Education and Enjoyment Rayonier's PotclatchDeltic Buy Signals New Opportunities in WoodWritten by Gabriel Osorio-Mazilli. Published 10/20/2025. Trade tariffs in the United States have created volatility in stock prices and business planning throughout 2025. That volatility is a double-edged sword: some investors are hesitant to stay exposed to equities, while others see opportunity if they take the right approach. Within the basic materials sector, wood products have been the focal point of the latest tariff round, prompting consolidation as companies try to mitigate the impact. Rayonier Inc. (NYSE: RYN) recently moved in this environment, as the company chose to acquire PotlatchDeltic Corp. (NASDAQ: PCH) for $4.4 billion in total, signaling to retail investors that some names in the space may be more attractively priced today. Investors can spread their bets in a market-neutral manner by considering shares of Weyerhaeuser Co. (NYSE: WY) as a potential long, while using Johnson Controls International Plc. (NYSE: JCI) either as a hedge or as an example of a stock to avoid in this environment. Why Weyerhaeuser Wins Today Every week brings new headlines of extreme weather and widespread blackouts. The U.S. power grid wasn't designed for this – and now it's failing under the pressure.
Paladin Power isn't trying to fix the grid... they're building a better alternative. Invest now and get up to a 30% bonus on shares! Key Points - As the wood industry begins to consolidate in the United States, a merger between Rayonier and PotlatchDeltic shows that upside can be had in the space.
- Weyerhaeuser is one name to consider as a potential buy, exposed to domestic wood demand trends and earnings power.
- Johnson Controls can act as a hedge to this play, as exposure to government contracts may hurt future EPS.
Companies exposed to local demand and domestic commodity prices should benefit when tariffs push buyers toward American suppliers to avoid added import costs. That dynamic underpins Weyerhaeuser's upside potential. Although Weyerhaeuser also has exposure to Canadian forest land, most of its production and revenue are generated in the United States. That U.S. footprint helps explain why markets are willing to pay a premium for the stock: Weyerhaeuser trades at a price-to-earnings (P/E) ratio of 61.3x today, well above peers in the building products industry. The group trades at an average P/E of 12.9x, and Weyerhaeuser's premium reflects the market's preference for domestically focused producers. Wall Street analysts see further upside too, with a consensus price target of $32.63 per share, implying roughly 40% upside from current levels. Another attractive element for risk-conscious investors: Weyerhaeuser trades at roughly 70% of its 52-week high, suggesting much of the tariff-related fear is already priced in. Short sellers appear to be retreating, as short interest has declined about 13.7% over the past month, which may indicate bearish capitulation. With quarterly earnings due by October 30th, investors could be in for a surprise if the company's results confirm the market's current confidence. Hedging Bets, Calling Tops One way to amplify this thesis is to take a bearish position elsewhere. For investors who prefer not to short or buy puts, Johnson Controls can still serve as a useful gauge against Weyerhaeuser's long case. If demand shifts toward domestic wood manufacturers, Johnson Controls could underperform. The company has meaningful exposure to China and relies on government projects for a portion of its revenue and earnings—areas that could be pressured if federal spending is delayed. Given recent government shutdowns, some of the projects that Johnson Controls depends on may be postponed or canceled, adding near-term uncertainty to its outlook. Wall Street's consensus price target of $113.41 per share suggests the stock is near fair value, trading within about 3% of that target. The shares trade at a price-to-book (P/B) multiple of 4.2x today. That P/B multiple is below the construction sector's average of 4.7x (see competitors and alternatives), indicating limited market confidence in Johnson Controls' ability to deliver EPS growth amid potential project cancellations. The MarketBeat consensus forecasts just $0.93 in EPS for Q3 2025, below the most recently reported $1.05. Under this scenario, a decline in Johnson Controls from its 52-week high could signal a rotation into strategic long plays like Weyerhaeuser, or it could present a hedging opportunity via short sales or put options, depending on an investor's risk tolerance.
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