Carta, Cellulosa e Foreste - gz
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By: GZ on Mercoledì 18 Settembre 2002 16:05
Il settore "Carta, Cellulosa e Foreste" in generale mi sembra uno di quelli non solo non vulnerabili, ma persino con un potenziale di rialzo.
Avendo raccomandato ieri un titolo del settore approfitto qui per copiare l'analisi che fa Odette Galli su realmoney: è riferita a titoli diversi da quello che mi sembra migliore, ma riporta i dati su questo settore e il perchè dovrebbe fare bene
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Paper Stocks Are Carrying Bargain Price Tags
By Odette Galli
09/17/2002 10:53 AM EDT
This so-called economic recovery has been anything but typical. Sure, consumers have been a key source of strength, as was the case in previous upturns. But so far, the collateral benefit to the manufacturing sector has largely been absent. Making matters worse, the sustainability of consumer spending is now in doubt.
So it's no surprise that cyclical stocks have had a tough time gaining any traction this year. Recently, the paper stocks in particular have seen their year-to-date outperformance dwindle. Since January, the Dow Jones forest products and paper index was down 11.6%, 400 basis points better than the 15.6% decline in the Dow Jones Industrial Average. But in the past month, the paper index has given up 9%, compared to just a 2% decline in the market.
Solid Values
Despite the unconvincing recovery, these stocks still represent good values, particularly if you believe in the likelihood of stronger economic growth in 2003. Although the recovery hasn't played out as I had hoped, it's too soon to throw in the towel. The paper sector is still indicating a recovery rather than another dip.
The latest news on the economic front has been anything but robust, and recent data from the paper industry have weakened as well. The first bad sign was the 160,000 metric-ton increase in July pulp inventories, above the historical average increase of 145,000. Although July shipments rose 1% from June and 7.6% from last year, this brought the shipment-to-inventory ratio down to 1.25, the first decline since January. According to Merrill Lynch's paper analyst Anna Torma, a declining ratio typically suggests pulp prices are at risk.
Preliminary data for August indicate that inventories rose 112,000, also well above the 85,000 historical average. Pulp shipments for the month rose 2.9% year over year, but slid 3% sequentially from July. Although August pulp prices of $510 per metric ton are still comfortably ahead of their lows earlier this year, most analysts, including Torma, now think that if demand doesn't strengthen in September, pulp prices could slip again. Indeed, the spot and futures prices of pulp have already dropped $50 per ton, giving back about half of their gain since March.
Newsprint, while still depressed, seems to have more solidly turned the corner. July shipments rose 2.7% from June and 4.7% from last year. Inventories also increased slightly higher than normal in July to 1.6 million tons, but still remain at historically tight levels. Although still close to their cycle lows, newsprint prices of $455 per ton appear poised for a solid price increase this month. Producers also recently announced a $50 per-ton price increase that reportedly is being phased in during this quarter.
Better Trends Ahead
A newsprint recovery may be a slow one, but there's evidence that the worst is over. While total advertising revenue growth is still declining, it is doing so at decreasing rates, partly because comparisons start to get much easier over the next few months. Advertising spending was already falling at a double-digit rate before Sept. 11, 2001, but the declines accelerated afterward, bottoming at a 15.6% decline in January. Since then, the declines have abated significantly. The first quarter as a whole was down 6.2% and the second quarter was down just 1.8%. July advertising spending fell just 0.4%.
This improving trend and the prospect of easier comparisons lend credence to forecasts like that of UBS Warburg analyst Brian Shipman, who thinks advertising spending is "on the verge of breaking into positive territory," according to a recent report.
For this reason, I still think Canadian newsprint producer Abitibi-Consolidated (ABY:NYSE) looks like a good idea, particularly with the stock around $7, below where I originally highlighted it last December. Based on its share of total capacity, Abitibi is North America's top newsprint producer by a wide margin, with 35% of the market compared to Bowater (BOW:NYSE) , the next largest producer with a market share of 22%, according to Morgan Stanley's Matt Berler.
Berler estimates that every $40 per-metric-ton increase in newsprint prices adds about 30 cents per share to Abitibi's earnings. Although the stock may not look cheap on this year's earnings estimate of 48 cents per share, Abitibi could earn more like $1 next year if a recovery in newsprint strengthens. That could be just the beginning. Berler has a per-share earnings estimate of $1.89 for Abitibi for 2004.
I admit it's tough to get excited about cyclical stocks right now. But if you're hunting for bargains, this is one of the few places you'll find them.
Edited by - gz on 9/18/2002 14:6:16
