Claymore ETF Takes A Whack At Timber

"There are a variety of successful hard-asset exchange traded products in the marketplace, including gold, steel and oil," said Christian Magoon, a director at Claymore Securities. "Timber had been ignored, and we felt that its low correlation to other asset classes represented an opportunity to deliver a much-needed allocation option."

The companies are based in 11 countries. The index weights the U.S. at 26.4%, followed by Canada at 12.3%, Japan 11.5%, Finland 9% and Brazil 9%.

The top three holdings are Votorantim Celulose e Papel (NYSE: - ) of Brazil, Grupo Empresarial of Spain and MeadWestvaco (NYSE: - ) of Virginia.

Other U.S. companies in the index include Deltic Timber (NYSE: - ), International Paper (NYSE: - ), Plum Creek Timber (NYSE: - ) and Potlatch (NYSE: - ).

Each stock accounts for 1% to 5% of assets.

Rising Pulp Production

VCP, Brazil's third-largest eucalyptus pulp producer, surpassed earnings views in each of the past four quarters. Although pulp and paper prices undercut expectations, domestic demand for pulp exceeded forecasts.

Unibanco initiated coverage of VCP with a buy rating, along with three other pulp and paper companies.

"VCP has a clear growth strategy, yet to be priced in by the market," Rogerio Zarpao said in a client note.

Margins should rise as a result of higher pulp production at two of its mills and high international prices. And it stands to benefit from a merger with rival Aracruz Celulose (NYSE: - ), said Zarpao. VCP acquired 28% of Aracruz stock in 2003 to increase international exposure in the pulp market.

Pulp Sales

Zarpao expects VCP to grow annual pulp sales by 17% annually for the next six years. But sales growth has been flat the past two quarters. Revenue picked up 23% and 9% the prior two quarters. Earnings growth over the past four quarters ranged from a mediocre 4% to 126%.

Shares have pulled back to the 10-week moving average for the first time since breaking out of a V-shaped, 10-week base in late September.

This month, packaging and school-supplies maker MeadWestvaco opened a consumer packaging plant in Wuxi, China, to serve the Eastern European and Middle Eastern markets.