Domtar (UFS) Scales 52-Week High On Solid Growth Dynamics
Zacks Investment Research | Dec 26, 2017 09:45PM ET
Shares of Domtar Corporation (TO:UFS) scaled a new 52-week high of $50.20 during yesterday’s trading session, before closing a notch lower at $49.66 for a healthy year-to-date return of 27.2%. Barring minor hiccups, Domtar’s share price has steadily been on an uptrend since mid-August. Notably, this Zacks Rank #2 (Buy) stock has the potential for further price appreciation with long-term earnings growth expectation of 5%.
Growth Drivers
Domtar is currently seeking growth through profitable investment opportunities with a commitment to pollution-free environment and sustainable practices. The company is also streamlining the cost structure, improving revenue quality and maintaining a healthy cash flow with a disciplined approach to cash utilization. Domtar shut the largest paper machine in the United States at the Ashdown mill as it converted the Ashdown paper machine to fluff pulp production machine. With the Ashdown fluff pulp line and the streamlining of Plymouth facility, the company has approximately 2 million ton market pulp business that is well positioned for long-term growth.
In addition, Domtar is executing well its strategy to expand its fiber-based business through acquisitions, strategic investments in capacity building and repurposing of assets. Domtar acquired the assets of Butterfly Health Inc. for an undisclosed amount. The strategic acquisition expanded the Personal Care segment of Domtar with complementary products. The transaction further augmented its global footprint in healthcare markets, with a focus on Europe.
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