Paper Stocks May Have Widespread Appeal, But Lately Such Issues Have Been Laggards
If the stock market recovers from yesterday's pounding, there could be three popular formulas for getting rich: Buying earnings plays, inflation plays or restructuring plays. Paper stocks, a triple play, might get some attention.</br></br>Shares of companies such as International Paper, Scott Paper, Federal Paper Board and Bowater seem to have everything going for them. While many other companies are reporting disappointing profits, the paper industry is showing better results than expected.</br></br>Moreover, prices for linerboard and other products have been rising. And the stocks, which tumbled after outrunning the S&P 500 in the first quarter, are comparative bargains. Some people think they might tempt raiders, as did Hammermill in 1986 before International Paper acquired it.</br></br>But recently, paper stocks have disappointed their fans. Some, like International Paper, are more than 15% below 1987 highs, even though analysts expect more big industry earnings gains well into 1988.</br></br>Anyone buying paper shares in recent months has underperformed the market, says Tom Farrell, analyst at Deutsche Bank Capital in New York. Speculators haven't so far made much money, despite sporadic rumors that raiders might be after Mead.