The new prices, which aren't specified, could triple Smurfit's earnings if they hold through 2009. That would mean earnings as high as $1.50 per share versus. the estimated 45 cents per share right now. And even after Smurfit's 30% run up yesterday, the share price would only be about four times earnings.
As of the end of July, containerboard inventories (measured in tons) were at their lowest since the 1980s. And Hurricane Gustav is expected to cut production by another 30,000 tons.
Perhaps now is the time to jump into the paper market.
Buy Smurfit-Stone Container Corp. when it falls below $6 and hold for gains of at least 30% in the next six months.
Stock position: None.