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Stockchase Opinions

Michael UnderhillRock-Tenn Co.RKTBUYSep 17, 2013

Well-positioned. Looking at packaging/container board names, the bottom of the box usually has Rock Tenn imprinted on the bottom. When you look at container board price hikes, and increases in container board packaging, this one has pricing power. Price hikes they have implemented in the last 12 months are driving free cash flow. That free cash flow is driving the stock price. Has a long way to go.

$116.77

Stock price when the opinion was issued

$13.07

As of Jun 12, 2026. Market Open.

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BUY

Was upgraded today. They have invested big during the housing freeze, but as that thaws it, RKT will benefit big.

BUY

Will benefit huge if interest rates fall, even slightly. This is a mortgage business, and he wants at minimum a re-financing boom. An activist fund behind the MSFT and CRM turnaround now own 10% of RKT. They are buying two companies to expand.

COMMENT

If the Fed cuts rates, this will definitely go up 50%, but how likely with they cut? He's more negative short term than most people.

COMMENT
Everyone asks him why this has stalled out, given that the housing and mortgage markets are strong. Maybe because investors are buying banks instead or buying fintechs, but they don't consider RKT a fintech name. He's neutral about RKT.
DON'T BUY
Sold this summer because margins were getting killed as commodity prices were rising and their free cash flows were disappearing. Started to see more competition and a decline in their business model.
TOP PICK
Good generation of cash flow. Trading at 10 X earnings. Has a lot of cash. Dividends.