Trying to pick up stocks in anticipation of cyclical recoveries is like trying to snatch a falling knife. Pull it off and you're treated to the "oohs" and "aahs" of your suitably impressed friends. Do it wrong, though, and you're treated to a wait in the ER, some stitches, and a tetanus booster.
Another spike in natural gas will make me live to regret this, but I think 2006 could still end up being a better year for Rock-Tenn. Now, the situation here is not identical to that for Packaging Corp.
A few other things about the quarter give me added confidence. First, despite the poor earnings performance, the company still produced positive free cash flow. Second, it secured a multi-year agreement with Procter & Gamble's
Clearly this is not the right kind of stock for everyone, but I'm intrigued about a rising price environment and a company with a very high-quality mill in Alabama. Don't mistake this for anything like a sure thing, but patient Fools may yet want to dig in and see if they find potential value here.
For more of the Foolish paper chase:
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).