Boise Incorporated represents everything a traditional value investor loves, a P/B of nearly 1, a single digit P/E, excellent free cash flow, and a tendency to return that cash to shareholders. What it also has is GADCP, Growth at a Dirt Cheap Price.
Revenues will increase by 20% this year, due to a recent acquisition, but also because they’ve been able to increase prices to offset some input cost pressure. EBITDA growth is impressive:
During the last six months, Boise has returned .80/share to investors, and this trend will continue, as the current price of $7.18 is below a recent warrant conversion at $7.50 that raised approximately $300 million. Furthermore, management has hinted at share repurchases, and one or both of these events should be announced on the August 4th conference call. As Boise is below their targeted debt/ebitda ratio, I do not expect and debt retirement in the near future.
John Paulson is a 6.6% holder, and insiders hold 9% of shares. Institutional ownership and insiders own approximately 97% of shares, so any interest in the shares should drive prices quickly upward, and BZ traded above $9 for the majority of this year, reaching $9.85 on April 29th. This clearly has been a victim of seasonal selling of small-cap stocks and uncertainly in Washington.
EPS growth in Q1 was over 200% year on year, and revenue growth was 15%:
They expect significant synergies from the acquisition of Tharco packaging, and have continued to execute a quiet transition away from paper to packaging; a higher growth and higher margin industry.
I will have more on BZ next week as they report what should be an excellent Q2.
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