International Paper Still Undervalued (IP)

Corrugated cardboard isn't very exciting, but for investors looking for a value play, it could be just what they are looking for. Corrugated-box shipments in the U.S. rose 2% in the first quarter, following a 3.5% rise for all of 2010. This is the first sequential increase following a yearly advance since 1994. This rise in corrugated traffic will undoubtedly benefit International Paper IP, the world's largest paper and packing company. The strengthening U.S. and global economies are helping boost demand for containerboard used in packaging. Inventories have peaked and capacity is running at 3 year highs. According to analysts, already stretched supplies will most likely lead to price increases of about $50 a ton on containerboard by this summer. International Paper's reported robust first quarter earnings as a variety of product lines demonstrated good performance. With the global pulp and paper market continuing to strengthen, analyst's estimate that shares of IP could deliver nearly 40% upside over the next year. Shares of International Paper currently trade at a cheap P/E of 13 and offer a strong dividend yield of 3.3%. Even if shares don't surge, the stocks strong dividend could provide a cushion in today's sideways moving market.