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May 7, 2008 Dear Friend, We call your attention to IP at $26. It benefits from prospective synergies and market consolidation and market leadership from buying WY's containerboard unit. It has investments and expansions in Brazil, Russia and Eastern Europe in higher growth and lower cost product lines and regions. Its U.S. containerboard, uncoated free sheet and paperboard units have reasonably high operating rates. Sure, the Shorewood consumer packaging unit, the debt level and the aggregate end market growth rates are not so fine, but the stock appears near or less than ten times prospective earnings. Cost escalation in stagnant price scenarios, like a high oil price and recession scenario, pose a risk but many risks appear already discounted in its share price that anticipates perhaps $1.75-$2.00 of long-term EPS. We like it. Faithfully yours, John C. Tumazos |
Copyright © 2008 John Tumazos Very Independent Research,
LLC
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