Quote: "The main concern we face in the coming year is downward pressure on saw log prices caused by a weak lumber market." - CEO Michael Covey

Profile: The old-time timber company has transformed itself into a bright-and-shiny new REIT, or real estate investment trust. As such, the Spokane company doesn't pay federal income taxes. The trade-off is that it must pay out 90 percent of its profits in dividends. But in many ways, Potlatch still acts like an old-line logging show: it owns 1.7 million acres of timber land, of which 842,000 are in Idaho, making it the Gem State's biggest private landowner. It harvests trees off that land to feed 13 mills operated by a subsidiary, Potlatch TRS. It also has a real estate business, which generated $24 million in revenue last year.

Financials: Potlatch's Q4 '07 profits took a beating, primarily because of a pair of one-time events that skewed the comparison with Q4 '06. Potlatch reported earnings of $11.2 million, down from $45.3 million. The company had good revenue growth for the quarter, up 7.8 percent to $417 million. The Pulp and Paperboard Segment had the strongest performance, growing its operating income by 70 percent. On the other hand, the Resource (i.e., timber) Segment saw its income cut by half, as Potlatch scaled back timber harvests in the face of declining demand for lumber.

Stock Price: Closed Friday at $41.27, down almost 3 percent on the day. The 52-week range is $37 to $49.98. Trades as "PCH" on the NYSE.

Analyst Opinions: The average rating is a moderate buy. Some investors are big fans of REITs, saying they provide steady dividends based on stable cash flows. Seeking Alpha blogger Jonanthan Callahan says REITs provide "'bond-like diversification, with returns that would be expected from smallcap or emerging markets."

Things to Consider: A slowing housing market means less demand for lumber and timber. That's bad news for two of Potlatch's five segments ? mitigated somewhat by the fact that 58 percent of the Resource Segment's sales are to other Potlatch business units.

Management reports strong demand for pulpwood products - used for things like paper plates and cardboard packaging. Exports are up, thanks to the weak U.S. dollar.

Demand for consumer products might increase in a weak economy, however. Potlatch is a leading producer of tissue products sold by grocery store chains under their own house labels, which typically are priced as bargain brands. In a weak economy, shoppers can be expected to cut costs on consumer staples by switching to lower-cost brands.

The company has designated between 250,000 and 300,000 acres as higher-and-better-use land suitable for development over the next decade. But with the housing market slowing, it would seem there will be less near-term demand for new rural housing.