The lumber market has been a roller coaster in 2021, and investors should look at the more defensive Weyerhaeuser to find yield and upside as the ride comes to an end, according to Goldman Sachs. After rocketing higher early in the year, the price of lumber has reversed dramatically, falling 40% in June and continuing to slide in July. Goldman analyst Susan Maklari said in a note Thursday that the market was setting a "new normal" for lumber prices but still initiated Weyerhaeuser at a buy, saying the company's business mix made it a defensive play for the industry. "We estimate Weyerhaeuser's 11 [million] acres of timberlands accounts for ~75% of its enterprise value, of which 65% is in the South. In our view, this, along with the lack of correlation between Southern log and lumber prices, should result in peer relative outperformance, even as wood products adjusts to lower commodity prices," the note said. The stock has lagged the broader market this year as well, making it an attractive play even as the lumber industry resets. "Although its wood products operations will likely realize near-term pressure, with the stock up 4% year-to-date and a 2% dividend yield, we believe the current valuation is an attractive long-term entry point," the Goldman note said. The firm set a price target of $40 per share, which is 15% above where the stock closed on Wednesday. Goldman is less bullish on other lumber stocks, with Maklari initiating coverage of Boise Cascade and Louisiana-Pacific at sell. —CNBC's Michael Bloom contributed to this report
