Paper profits

Looking for a solid stock at a reasonable price? Give paper manufacturer Westrock (NYSE: WRK) a look. It does face some uncertainty due to the ongoing global trade war and worries about a recession, but its earnings and operating efficiency have been growing as it integrates a massive acquisition, and demand for paperbased packaging is growing, too.

Paper isn’t the most exciting investment out there, but the rise of online shopping has pushed demand for cardboard boxes to an all-time high, while negative consumer attitudes about single-use plastics and plastic packaging are causing consumer-facing brands to run toward paper-based solutions.

Through the first nine months of fiscal 2019 (the period ended June 30), Westrock reported a 13% increase in revenue and a 31% increase in operating income compared to the year-ago period. Cash from operations jumped 23% in that span, spurring confidence in the long-term sustainability of its dividend, which recently yielded 5%.

Westrock expects its cash flow to keep growing as it reaps the benefits of operating efficiency improvements and organic growth initiatives in the next few years. That includes investments to modernize existing manufacturing facilities and new product launches to better serve the needs of commercial customers. With shares trading near five-year lows, investors with a long-term mindset should take a closer look.

(The Motley Fool has recommended Westrock.)