One of these days, I'm gonna learn the lesson: Make the trade and then write about it.
While I've been nervously optimistic on Rock-Tenn
So far, at least, so good. The stock has moved up about 25% from that point, and the company seems to be in better shape. Then again, if a few things continue to go the company's way, who's to say that there might not be some more opportunity here?
Revenue in the recently announced quarter was up about 34% from the year-ago level and up about 8% sequentially. Likewise, operating and net profits were meaningfully better on both annual and sequential comparisons. In looking at the company's paperboard business, volumes were up about 9% sequentially, pricing was up slightly, and the company reported capacity utilization of 96%.
Certainly helping matters has been the one-two punch of improving pricing and lower energy costs. Natural gas costs were quite a bit lower this quarter than in the immediately preceding quarter, and present-day pricing is pretty attractive for the company. What's more, finished good pricing is looking better -- the company saw higher prices this quarter (up a bit sequentially, and up 11% year over year) and just announced a further $40-per-ton increase on coated recycled paperboard.
I've spoken favorably about other paper and packing companies in the past, and that seems to be panning out a bit. Packaging plays like Packaging Corp
And I think there's still more room to run for some of these. Rock-Tenn isn't the safest idea out there, but if pricing on finished goods and natural gas stays in its favor and a deal with Procter & Gamble's
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).