the paper/pulp industry has been in an extreme bear market for a few years now. take a look at others in the industry, ABY, SFK.UN, etc. all at multi year lows. at this point, it looks like trying to catch a falling knife.
with the recent dividend cut buy POP, they are telling us that their cashflow is quite a serious problem, and a turnaround could be quite a ways down the road. if at all. it is panic mode in the indusrty, and energy prices are not helping at all.
on top of this, analysts hate the group. all good things to the long term contrarians.
if you have a long term outlook, 3-5 years, anything under 7.50 is a bargain, as just by simple ratios, (excluding the negative p.e, and debt ratio), book value, price to sales, price to cashflow, could give it a fair value of 15.00 someday.
it does not look like there is any consolidation in the industry , as all others in the sector are hurting too and are not in any position to be buying up competitors.
if Pope & Talbot was able to survive these very tough times, and if the industry was able to turn around to profitability, somewhere down the line, the stock could even be upgraded in price, higher than the 15.00 fair value.
at today's price and the position the pulp/paper industry finds itself in at this time, be prepared to lose everything you invest in this company.
such is extreme value investing.
AI
