Clearwater Paper
As of October 2024, Clearwater Paper was trading at $27.9 and had a market cap of $464mm. The stock is down 50% from a recent peak in July.
The company is currently undergoing significant restructuring to concentrate exclusively on the paperboard side of its business, which has higher and more stable margins and better growth potential.
Recently, a combination of ill-timed factors have caused the company's shares to trade at ~0.7x tangible book:
a major planned maintenance outage;
an additional $700 million in debt from acquiring a competitor's facility;
a decrease in product demand due to customer destocking;
and an increase in raw material costs linked to a slowdown in housing construction.
However, we believe these challenges are temporary and likely to reverse soon, for reasons we explain in our report. We see this as an opportunity to buy into an improving business at below book.
However, it is also important to note that given current debt levels and market conditions the risks with this stock are higher than usual.
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