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Domtar (UFS) Invests in Prisma to Boost Lignin Applications

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Domtar Corporation (UFS - Free Report) recently acquired a majority interest in Prisma Renewable Composites, LLC. This investment will help boost the process of commercializing Domtar’s lignin-based applications.

Prisma Renewable Composites is a Knoxville-based spin-off of TennEra, LLC, which is primarily involved in the development of advanced materials from lignin and other natural resources. Per the investment, Domtar will employ Prisma's scientific research capabilities and unique product development strategy, alongwith its commercialization and lignin production expertise.

The buyout will assist Prisma to foster a robust supply chain, right from lignin to the final product. On the other hand, Domtar will be able produce engineered-plastic compounds, such as Acrylonitrile Butadiene Styrene (ABS), and other high-value fiber and lignin applications after the deal’s closure.

Notably, Domtar’s Biomaterials unit remains focused on developing lignin-based materials. Lignin — the natural glue that holds wood fibers together— is a byproduct of the Kraft pulping process. The company also recently installed a demonstration plant at a mill in Ontario to exhibit lignin pellets as a bio-alternative to plastic, chemicals and other industrial products.

In addition, Domtar is currently seeking growth through profitable investment opportunities, with a commitment to pollution-free environment and sustainable practices. The company is also streamlining its cost structure, improving revenue quality and maintaining a healthy cash flow, with a disciplined approach to cash utilization.

Share Price Performance

Over the past year, Domtar has outperformed the industry it belongs to. The company’s shares have jumped around 27% compared with 12% growth recorded by the industry during the same time frame.

Zacks Rank & Other Stocks to Consider

Domtar sports a Zacks Rank #1 (Strong Buy).

Some other top-ranked stocks in the same sector are SMURFIT KAPPA (SMFKY - Free Report) , UPM-Kymmene Corp. (UPMKY - Free Report) and KMG Chemicals, Inc. . All three stocks flaunt a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

SMURFIT KAPPA has a long-term earnings growth rate of 5%. The stock has rallied 37% in a year’s time.

FMC Corporation has a long-term earnings growth rate of 10.9%. Its shares have improved 23% over the past year.

Celanese Corporation has a long-term earnings growth rate of 8.9%. The company’s shares have gained 18% during the past year.

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