After this segment, you
can see Jim's
Sudden:Death picks
here...
. . . .
.
JJC:
I've got a comeback play
for you... a real comeback
play tonight...
It's called Packaging
Corp. of America (PKG)...
This is the sixth-largest
producer of container
board and corrugated
packaging in the United
States... Yes. Think
cardboard boxes...
PKG is a lot like
Weyerhaeuser Co. (WY)...
The similarity is that I
recommended WY after it
bottomed and, at the time,
everyone laughed at me...
that was
back on March 19th...
and now, WY is up 8.4%...
I think PKG is in the same
situation... the worst is
over. Things are
getting better, and I
think it is time to
buy!...
Why do we like PKG?...
Well, first of all,
container board supplies
continue to be very tight.
There was an explosion at
an
International Paper (IP)
container board plant,
back on May 3rd.
That plant represents 2%
of U.S. capacity.
That's 2% that should be
out for at least a year
and a half. That
tightens pricing...
That should be really good
news for the rest of the
container board makers...
except, of course...
International Paper... and
we've disliked IP for
years now.
The fact that IP also
bought WY's container
board business should also
result in less capacity,
which should result in
higher prices for
companies like PKG...
Now, the container board
industry tried to raise
prices in March, which
hasn't happened yet. But,
given the explosion at
International Paper and,
given rising costs for
most of the industry, I
don't see how the price
can be stopped.
But what do I think makes
PKG the right way to play
this... Well,
sometimes, when have these
commodity companies...
what you have to do, if
you think there's going to
be a turnaround in the
economy, is you find the
lowest-cost,
highest-margin producer
which is a fancy way of
saying that PKG knows how
to make these things
(i.e., holding up a
cardboard box) more
profitably than the other
guys... How's
it do it?...
PKG's container board uses
more virgin - or new fiber
- rather than recycled
fiber. PKG is 23%
recycled; the peer group
is 51%. PKG is doing
the cheap and easy
thing... letting other
companies cut down trees,
rather than taking the
more expensive path, and
using recycled fiber to
make its container board.
It may not be green, but
they're making money doing
it, and that's the green
we care about in
Cramerica...
PKG also uses less natural
gas than its competitors.
We know that natural gas
has gone to $12 bucks,
right... And, since
we think that 2008 is the
year of natural gas,
because we believe that
it's only going to $16,
that's another reason to
buy this... a
low-cost producer, versus
everybody else...
Plus, more of PKG's
customers are either local
or regional companies,
which tend to take price
increases more quickly
than national account,
because they have less
clout... Hey, less
clout means even higher
margins for PKG...
On top of all the rest,
PKG has about a 5%
yield... which you know is
better than a sharp stick
in the eye... With a
relatively safe 5% yield,
PKG does have the cash
flow to cover it... and
has been a trampoline in
this market for any stock,
whether it be
AT&T (T)
or
Carnival Corp. (CCL)
or
Dow Chemical Co. (DOW)
or
Consolidated Edison Inc.
(ED),
or nare-do-well,
CBS Corporation (CBS)...
The company also has a
nice, $110 million
buyback... they're pretty
aggressive here. It
covers about 4% of shares
outstanding. They
believe...
The container board
industry has not been a
good place to be lately,
and PKG is only about 4
points above its $20 low
in late April...
But, with prices turning
around, I think you can
catch a good one here.
PKG does trade at a
premium to
International Paper (IP).
That's justified.
They've got better
diversification. I
think it's better...
And IP is just trying to
integrate the container
board business it bought
from
Weyerhaeuser Co. (WY)...
These guys are ready.
I think this stock could
go to $29... or even $33,
if we value it, based on
its high dividend yield,
and any turn in the
economy... You see,
I like to wait for a turn
with a big yield... This
gives it to us.
So, here's the bottom
line...
. . . .
.
The Bottom Line!:
I believe the container board business has turned around... and so has Packaging Corp. of America (PKG). I think you want to buy, before everyone else figures that out.
■
Stock Snapshots - Includes
all stocks mentioned above
■
Jim
Cramer's
rating on
this stock
STOCK
SYMBOL
Closing
price
that
day
Opening
price
next
day
Full Company
Name/Comments
(see comments above for
each)
Most popular
investing books ordered:
(click any book to see at
Amazon.com)
We need your help!
If you find our service valuable, your
donation is critically helpful to support
our operating costs and is
MUCH appreciated!
(click below to donate)
We are serving thousands
of
new visitors every day and our costs are
growing as well. Thank you for your
support & generosity!
After this segment, you
can see Jim's
SUDDEN:DEATH picks
here >>
Jim's Comments BEFORE
the interview:
A couple of weeks ago, we
said, why did we miss that
big run in
Google (GOOG)?...
And one of the things I
cited was the fact that I
was looking at
comScore (SCOR)
data... which I
interpreted as meaning
that maybe GOOG wasn't
doing as well...
Now, here's the issue...
The issue is that the SCOR
data was very right about
the domestic Google...
It just didn't represent
the big inflection point
in international.
So, I want to give SCOR's
chairman a chance to talk
about how to use the SCOR
data, and how well SCOR is
integrated into the web,
as kind of like the
Nielsen (rating system) of
the web...
So, on the line now is
Gian Fulgoni... He's
the chairman of
comScore (SCOR).
Welcome to Mad Money,
sir...
. . . .
.
Jim's Comments AFTER
the interview:
Gian Fulgoni... I stand
corrected about how to use
the
comScore (SCOR)
data because, obviously,
it's good for domestic.
It didn't really work for
international, or for
Google (GOOG)...
Thank you for coming on
the show...
. . . .
.
■
Stock Snapshots - Includes
all stocks mentioned above
■
Jim
Cramer's
rating on
this stock
STOCK
SYMBOL
Closing
price
that
day
Opening
price
next
day
Full Company
Name/Comments
(see comments above for
each)
Go to the SUDDEN:DEATH
SEGMENT from
tonight's showhere >>
See current quotes on Yahoo!
Finance from
tonight's show stocks
here >>
Symbol keys:
A Charitable Trust stock.
- An asterisk next to a
stock symbol indicates that
Jim mentioned it is a stock
that he manages within
his
charitable trust portfolio.
You can see the complete
portfolio
of stocks
here >>
Thumbs up - indicates
he would buy the stock or,
at the very least, not sell
the stock. We do our
best to interpret Jim's
opinion on stocks, as we
think it is indicated by his
comments during the show.
Please read his comments to
decide for yourself.
Thumbs down -
indicates he has said not to
buy or to sell the stock,
based on his comments
We do our best to interpret
Jim's opinion on stocks, as
we think it is indicated by
his comments during the
show. Please read his
comments to decide for
yourself.
Back up the truck -
indicated by Jim, when he
says the stock is so good,
that he would do a
'mon-back' on the stock...
In other words, this is the
sound someone would say to a
truck driver, "Come on
back... " as he is "backing
up the truck" to load up on
his cargo. Translation
for buying stocks:
This recommendation by Jim
indicates that, after you do
your own
homework on the stock,
you should feel comfortable
loading up on it, as it is
in a good position to be
bought at this point.
Stumped. - Of the
2,000+ stocks that Jim
Cramer has in his head, for
which he has an informed
opinion, he sometimes comes
across a caller with a stock
he does not know well enough
to opine on... He then
indicates he is stumped and
will have to come back to
it, after he does some
homework of his own on
the stock. This
usually occurs during the
Lightning Round, when Jim
does not know in advance who
is calling, or what their
stock question is about.
Definitions of key phrases
used by Jim, known as
"Cramerisms":
Definition: 'Pull the
trigger' is Jim's phrase for making
the decision at that point to trade -
either to 'buy' or
to 'sell' (although he
usually uses the phrase for
buying), as if to say you
should feel comfortable
enough to make the final
decision without looking
back...
Definition: 'Ring
the Register' is Jim's phrase for
selling a stock, and making
it a final sale, that you
should not look back on.
Put it behind you.
Definition:'Let It Come In' indicates how you
may wait for it to pull back, or have the
stock price come down briefly, as your
chance (after letting it come in) to buy
the rest of your position (i.e., total
number of shares you own in that stock).
Definition:'backing it up'
or 'doing a 'mon-back' is Jim's
phrase for the metaphor of backing up a
truck to load up on a stock by buying
it. 'Mon-back is short for the
imaginary worker saying, 'Come on
back...' as the truck is backing up to
receive its load... Notice that we use
the little truck icon to indicate where
Jim has mentioned this.
Translation for buying
stocks: This
recommendation by Jim
indicates that, after you do
your own
homework on the stock,
you should feel comfortable
loading up on it, as it is
in a good position to be
bought at this point.
See more
"Cramerisms" & other
financial phrases
here >>
Helpful Websites:
See the stocks currently
known to be in Jim Cramer's
Charitable Trust at:
Stock Homework 101:
This is an excellent
upcoming site that provides
resources and links to help
you do that homework that
Jim Cramer recommends after
hearing his suggestions...
FastMoneyRecap:
This site will be a quick
summary of recommendations
made by the great Fast Money
TV show crew, that will
offer you a unique service,
to compare their picks to
Jim Cramer's past comments
about those stocks.
