Plum Creek Timber Co. Inc. (NYSE:PCL) has a very strong balance sheet and will be able to weather the real estate storm. Plum Creek is the largest and most geographically diverse private landowner in the U.S. and owns more than 7 million acres of timberlands in the Pacific Northwest, the South, and the Northeast.

Plum Creek Timber also owns and operates wood products manufacturing facilities in the Northwest. While residential construction is weak, prices still are strong in some of the company’s segments, such as pulpwood. And long-term opportunities outside of the housing market are abundant: Plum Creek is developing its non-timber natural resource business and also aims to serve emerging wood-based renewable energy markets.

To protect value, Plum Creek Timber plans to continue to defer harvests in 2009 along with reorienting its land focus from weaker to stronger markets. PCL’s strong balance sheet and about $370 million in cash as of the end of fiscal 2008 give them the strength to weather the real estate storm.

Recently the company has been repurchasing its shares, and in 2008 the number of shares outstanding decreased by about 4%. As of year-end 2008 the company had approximately 166 million shares outstanding and $137 million remaining under its current repurchase authorization. The buybacks probably won’t continue at the same pace as last year.

With Plum Creek Timber’s solid balance sheet think the dividend (5%) looks safe and that the resilient value of Plum Creek’s assets provides a good floor under the stock.  Plum Creek Timber’s stock has made a nice 37% move off the March low of $22.88 and now technically the stock looks healthy. PCL’s stock price is trading above its 20 day EMA and 50 day EMA, and last week it touched the 200 day EMA before backing off to the current price of $31.50. A possible good risk reward entry point to buy PCL is at $30. The $30 range is a 38.2% Fibonacci retrace from the March high of $34.37 down to the March low of $22.88. You can use a tight stop of a close below $28.50, which is a close below a 50% Fibonacci retracement from the March high to the low.  A close above the 200 day EMA would signal a good chance PCL will at least test the high’s made in November and December 2008 in the $37-38 range. I would use $37 as a 3-6 month target.

Note: I do not own PCL