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Shares of Domtar Corporation (UFS - Snapshot Report) touched a new 52-week high of $89.07 during its trading session on Dec 5. This is an increase from the previous high of $89.06 witnessed on Oct 28.

Domtar closed the trading day on Dec 5 at $88.99, reflecting a year-to-date return of 4.8%. The trading volume for the session was 447.9K shares. This paper products company, with a Zacks Rank #2 (Buy) has potential for further accretion. This is reflected by both its earnings growth rate (3.0% over the next five years) and earnings estimate revision for 2014.

Growth Drivers

Domtar has been eyeing expansion for quite some time now. The company has been launching products and also pursuing inorganic growth. Moreover Domtar is hiving-off assets which are incompatible with its core competencies.

Recently, Domtar’s wholly-owned subsidiary, Domtar Inc. entered into a definitive agreement with Windmill Development Group Ltd., for the sale of the erstwhile Domtar paper mill site in Ottawa, Ontario and Gatineau, Quebec. Also, last month, Domtar announced the acquisition of privately-held Laboratorios Indas, based in Spain, to expand its personal care business in Europe.

The company expects to generate more business on the back of increasing global demand of pulp, mainly in China. An improvement in the paper prices are expected to boost revenues in the subsequent quarters.

In the past 60 days, the Zacks Consensus Estimate for 2013 has increased 3.7% to $4.21 per share, and for 2014 it has gone up 31.8% to $8.46.

Other Stocks to Consider

Domtar currently has a market capitalization of $2.9 billion. Other stocks to watch out for in the industry include Clearwater Paper Corp. (CLW - Snapshot Report), KapStone Paper and Packaging Corp. (KS - Snapshot Report) and Orchids Paper Products Co. (TIS - Snapshot Report). While Clearwater Paper has a Zacks Rank #1 (Strong Buy), KapStone Paper and Packaging and Orchids Paper Products hold a Zacks Rank #2.

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