Buckeye Technologies, Inc. (NYSE:BKI)

CAPS Rating: 5 out of 5

The Company manufactures and distributes value-added cellulose-based products used in disposable diapers, personal hygiene products, engine, air and oil filters, concrete reinforcing fibers, food casings, cigarette filters and rayon filaments etc.

Recs

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Player Avatar Har1en (99.09) Submitted: 7/24/2010 5:15:08 PM : Outperform Start Price: $11.12 BKI Score: +186.42

Found this with a simple screen for five star stocks with earnings, then sorted for low PE (thanks again TMF!). Buckeye is about to join my real world portfolio when the market opens on Monday. Their simple focus on high-end, specialty fiber products has the hallmarks of a great long term investment, and right now seems like the time to buy. PE is around 3 now, and for the last year, earnings have been strong.

Their products are manufactured from basic materials, so they are dependent on energy, timber, and cotton prices, however their finished products are extremely useful and many are things people need in good times or bad. They make the materials for diapers, feminine hygeine products, cigarette filters, LCD screen materials, concrete additives, hot dog casings, and many other strange and wonderful products that you probably never realized were made from trees. I like management's straightforward 10K filing from last year, and learned a few things reading it. If you're thinking about investing in this one, take the time to read it and know what you're getting into.

The company is small and specialised. Their sales force is very technical, and they have few competitors in their markets. They believe they can be best at their simple business plan, and I think that's a reasonable goal. Profits should flow from there.

I like that during 2009 they reduced officer compensation but held salaried worker salaries steady. They lost money in 2009, during the downturn, so those were reasonable things to do. Long term debt is fairly sizeable, but they are paying it down from cash generation at a good clip. Overall, I really like this company. It is in both a boring and a distasteful industry, and as far as I can tell, only 3 analysts are following it now.

Member Avatar sebsgoldboot (92.41) Submitted: 1/26/2011 10:00:38 AM
Recs: 0

Hi Har1en,
Just want to thank you for this excellent post on Buckeye.
I too was doing a screen and came across this company. Read your excellent post and got me interested to do some further research.
Bought in real life in Aug '10.
Thanks to improving earnings, repayment of debt and intro of dividend the stock price has almost doubled, much sonner than I possibly thought it would.
2nd qtr earnings released today (1/25/11) show revenue, earnings, margins all increasing nicely and dividend increased too. (Up 10% this morning)

Your post made me want to dig deeper with this company - I am very grateful to you for that.
Hope you bought in real life too.
Regards
Kevin

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