One of the hardest things to do in the investing world is to not buy the stock of a company you really like. I've wanted to own timber REIT Plum Creek Timber (NYSE:PCL) again for quite a while, but the price just hasn't seemed all that attractive. And though I'm still wrestling with today's present valuations, waiting has seen these shares dip back down to around $34.

It was a somewhat challenging quarter for Plum Creek. Revenue was up 6%, but operating income dropped 3% and net income fell 10%. Within that revenue line, timber sales were essentially flat and the company's growth came almost solely from the 44% growth in the small real estate business.

The biggest problem with the quarter was a glut of timber in the western areas of the company's southern operating division. Thanks in part to post-hurricane timber salvage, prices for sawlogs were down 8% in this area and pulpwood prices dropped 25%. That in turn led to a drop in average selling prices for the southern region overall, and the company cut its harvest back about 10%.

All the same, that's part of what I really like about the timber business -- if you don't like today's prices, wait a year and the value of your timber generally goes up. Now, that's a bit oversimplified, and there is a point where the economic returns of further growth start to diminish. But the fact remains that timber is a business in which it can really pay to have the luxury of being patient.

It's also important to realize that Plum Creek continues to explore non-traditional alternatives to making money. The company participates in some real estate development joint ventures and has begun to sell timberlands where the underlying value of a different use (recreation, conservation, housing, etc.) is higher. While timberlands can sell for around $1,000 to $1,500 (with a wider range possible depending upon the location and other details), Plum Creek sold recreation lands for over $4,000 per acre, and residential development lands for over $5,000 per acre. Factor in the fact that the company has identified 1.7 million acres as being available for "better purposes," and that adds up to a lot of potential value.

Despite the housing slowdown, companies like Pulte (NYSE:PHM), Lennar (NYSE:LEN), and Toll Brothers (NYSE:TOL) will continue to buy land, and people will continue to move further out into the 'burbs. As long as Plum Creek can continue to "sell retail" and replenish some of that land by "buying wholesale," this still looks like a strong cash-generation story.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).