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Domtar (UFS) Scales 52-Week High on Solid Growth Dynamics
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Shares of Domtar Corporation scaled a new 52-week high of $50.20 during yesterday’s trading session, before closing a notch lower at $49.66 for a healthy year-to-date return of 27.2%. Barring minor hiccups, Domtar’s share price has steadily been on an uptrend since mid-August. Notably, this Zacks Rank #2 (Buy) stock has the potential for further price appreciation with long-term earnings growth expectation of 5%.
Growth Drivers
Domtar is currently seeking growth through profitable investment opportunities with a commitment to pollution-free environment and sustainable practices. The company is also streamlining the cost structure, improving revenue quality and maintaining a healthy cash flow with a disciplined approach to cash utilization. Domtar shut the largest paper machine in the United States at the Ashdown mill as it converted the Ashdown paper machine to fluff pulp production machine. With the Ashdown fluff pulp line and the streamlining of Plymouth facility, the company has approximately 2 million ton market pulp business that is well positioned for long-term growth.
In addition, Domtar is executing well its strategy to expand its fiber-based business through acquisitions, strategic investments in capacity building and repurposing of assets. Domtar acquired the assets of Butterfly Health Inc. for an undisclosed amount. The strategic acquisition expanded the Personal Care segment of Domtar with complementary products. The transaction further augmented its global footprint in healthcare markets, with a focus on Europe.
Domtar outperformed the industry with an average year-to-date return of 27.2% compared with a gain of 17.2% for the latter. Moreover, Domtar also continues to streamline its network to build a more cost-competent distribution channel. Schlumberger, a leading supplier of technology to the oil and gas industry, had invested in Domtar's CelluForce joint venture to explore the use of NanoCrystalline Cellulose to enhance the productivity of drilling operations in the industry. This is likely to reduce the input cost in the oil & gas industry that is plagued by volatility in prices and is expected to boost the company’s bottom line.
A steady dividend payment policy is part of Domtar’s long-term strategy of providing attractive risk-adjusted returns to its stockholders. The company has historically repurchased shares as part of its balanced approach to deploy capital. The company’s investment strategy takes a holistic view of the rapidly evolving market and deploys a dynamic capital allocation approach to execute its growth strategy.
All these measures and solid inherent growth potential probably raised investor confidence and drove its shares to a new 52-week high.
Sappi Limited has a modest long-term earnings growth expectation of 7.6%.
Stora Enso Oyj has a healthy long-term earnings growth expectation of 9.6%.
UPM-Kymmene Oyj has a modest long-term earnings growth expectation of 5.1%.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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Domtar (UFS) Scales 52-Week High on Solid Growth Dynamics
Shares of Domtar Corporation scaled a new 52-week high of $50.20 during yesterday’s trading session, before closing a notch lower at $49.66 for a healthy year-to-date return of 27.2%. Barring minor hiccups, Domtar’s share price has steadily been on an uptrend since mid-August. Notably, this Zacks Rank #2 (Buy) stock has the potential for further price appreciation with long-term earnings growth expectation of 5%.
Growth Drivers
Domtar is currently seeking growth through profitable investment opportunities with a commitment to pollution-free environment and sustainable practices. The company is also streamlining the cost structure, improving revenue quality and maintaining a healthy cash flow with a disciplined approach to cash utilization. Domtar shut the largest paper machine in the United States at the Ashdown mill as it converted the Ashdown paper machine to fluff pulp production machine. With the Ashdown fluff pulp line and the streamlining of Plymouth facility, the company has approximately 2 million ton market pulp business that is well positioned for long-term growth.
In addition, Domtar is executing well its strategy to expand its fiber-based business through acquisitions, strategic investments in capacity building and repurposing of assets. Domtar acquired the assets of Butterfly Health Inc. for an undisclosed amount. The strategic acquisition expanded the Personal Care segment of Domtar with complementary products. The transaction further augmented its global footprint in healthcare markets, with a focus on Europe.
Domtar outperformed the industry with an average year-to-date return of 27.2% compared with a gain of 17.2% for the latter. Moreover, Domtar also continues to streamline its network to build a more cost-competent distribution channel. Schlumberger, a leading supplier of technology to the oil and gas industry, had invested in Domtar's CelluForce joint venture to explore the use of NanoCrystalline Cellulose to enhance the productivity of drilling operations in the industry. This is likely to reduce the input cost in the oil & gas industry that is plagued by volatility in prices and is expected to boost the company’s bottom line.
A steady dividend payment policy is part of Domtar’s long-term strategy of providing attractive risk-adjusted returns to its stockholders. The company has historically repurchased shares as part of its balanced approach to deploy capital. The company’s investment strategy takes a holistic view of the rapidly evolving market and deploys a dynamic capital allocation approach to execute its growth strategy.
All these measures and solid inherent growth potential probably raised investor confidence and drove its shares to a new 52-week high.
Other Stocks to Consider
Other stocks in the industry worth considering include Sappi Limited (SPPJY - Free Report) , Stora Enso Oyj (SEOAY - Free Report) and UPM-Kymmene Oyj , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Sappi Limited has a modest long-term earnings growth expectation of 7.6%.
Stora Enso Oyj has a healthy long-term earnings growth expectation of 9.6%.
UPM-Kymmene Oyj has a modest long-term earnings growth expectation of 5.1%.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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