I'm generally a fan of "specialty" paper and fiber companies like Rock-Tenn (RKT), Packaging Corp (PKG), and Glatfelter (GLT),
as these companies don't tend to be wildly popular with larger
investment banks or the financial media and they can often give patient
GARP-type investors good bang for the buck. On the other hand, we're not
talking about companies that are developing the next blockbuster cancer
drug or the next must-have consumer electronic gadget; overpaying for
these companies can lead to painful losses as there often isn't nearly
the same level of growth to bail out investors.
I am not
particularly bullish on Glatfelter's stock right now, but it is due
solely to valuation. While this company's management team has been canny
in transitioning from declining/shrinking products and end-markets to
other high-value opportunities, the shares seem to be richly valued on
the basis of discounted cash flow, EBITDA, and ROE. I do not doubt the
possibility that Glatfelter could attract an acquisition bid (as rival Buckeye Technologies (BKI)
did) and that an acquirer could pay more than the company's independent
stand-alone value, but I'd be careful about making a major new
commitment to these shares, as I do think there will be a time when
investors can buy them at a more reasonable valuation.
Please continue here:
Waiting For Glatfelter To Cool Off.
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