(MONEY Magazine) – The campaign to reduce West Coast logging to save the northern spotted owl has been about as welcome to the forest-products industry as a splinter in the foot. Executives at lumber companies such as Louisiana-Pacific have been fighting the environmentalists for years. It's now clear, however, that they should have been hugging the tree-huggers. To safeguard the remaining 6,000 spotted owls, the U.S. Fish and Wildlife Service has proposed banning logging on as many as 8.2 million acres of the Pacific Northwest. While the Interior Department has convened a panel -- known as the God Squad -- to reconsider the ban on 4,570 acres, forestry officials say that roughly 8 million acres are likely to be closed off by early next year. Quite unintentionally, this victory turns out to be good news for lumber companies. That's because it could shrink the national supply of timber by more than 10% -- at a time when economists expect demand for lumber to pick up by 10% to 20% as the housing industry recovers. Since dipping to an annual rate of 850,000 units last February, housing starts have rebounded to 1.06 million. ''We could see a 1.2 million rate by next spring,'' predicts analyst Saul Yaari at Piper Jaffray in Minneapolis. As a result, the price of lumber could rise by 20%, says analyst John Maack at Crabbe Huson in Portland, Ore. He thinks, for example, that framing lumber could jump from $190 per 1,000 board feet currently to $230 next year. Since Louisiana-Pacific generates almost 90% of its $1.8 billion annual revenues from building products, it is superbly positioned to cash in on the higher prices, the analysts say. They also expect the company, based in Portland, Ore., to profit from steadily growing demand for its innovative construction materials. These include strand board, which is made out of compressed wood flakes and is 10% cheaper than plywood, and wallboard made of recycled wastepaper, which is stronger than plasterboard. Yaari projects that earnings could climb from this year's $1.75 a share to $3.00 in 1992 and as high as $4.75 in 1993. Depressed by the housing recession, the stock fell from $46 a share in early 1990 to $20 last October but has lately recovered to $41.25. The analysts think it could rise another 45% to $60 next year.

BOX: Louisiana-Pacific Corporation

Recent price $41.25 52-week range $46 to $20

Est. earnings P/E per share ratio 1991 $1.75 23.5 1992 $3.00 13.8