I’ve been following Domtar for years and purchased the company when it was selling on the open market for less than $400 million. The company today still looks very undervalued. The company sells just below book value. They are using the heavy free cash flow they generate to pay off debt. The company also reinstated there dividend. Lastly, they just sold a significant portion of there forest assets for $80 million. Paper prices are at all time highs due to supply demand issues. What makes Domtar and other paper companies so valuable is the pricing power. With paper demand slowly decreasing year over year, paper producers are working together to tighten supply. I will keep this one on the radar.

Advertisements