Box Up a New Play

 | Dec 07, 2011 | 8:12 AM EST
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How about a lower-risk play on all of that online shipping? How about the company that makes the boxes for the goods that come in the mail?

Over the last five years, International Paper (IP) has turned itself into the most important container board company in the world. It did it in the nick of time because e-commerce is about shipping things that normally would be thrown into a bag at the store.

Now the company is more than likely to be thrown into a linerboard package that would be most likely made by IP, at least when the Temple Inland (TIN) deal closes.

Everyone is worried about this company and the potential collapse of world trade if Europe goes bad. Instead they should be looking at what will happen when the lowest cost producer of a commodity suddenly gets an uptick in sales and what that does to the bottom line. That's where we are now with IP, as it is by far the lowest cost producer and its numbers factor in about a 1% growth in the business. No more than that.

If we do see any pickup, a monstrous amount of that money will fall to the bottom line. In the interim, you are being paid to wait with a hefty yield and earnings estimates that I believe will have no problem being met.

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