Thursday, October 10, 2013

Seeking Alpha: Waiting For Glatfelter To Cool Off

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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