International Paper (IP) Poised to Grow on Shift to Online Sales, Lower Input Costs - Cramer

October 26, 2012 11:42 AM EDT Send to a Friend
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Price: $56.41 -0.62%

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    11 Buy, 7 Hold, 0 Sell

Rating Trend: Up Up

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    Up: 15 | Down: 38 | New: 13
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International Paper Co. (NYSE: IP) is up on the session following CEO John Faraci speaking with stock swami Jim Cramer on "Mad Money" Thursday night.

Ahead of the bell Thursday, Int'l Paper reported a two-cent per share earnings miss while revs also came in light. Shares closed just over 3 percent lower on yesterday's session.

Faraci noted how the merger with Temple-Inland, originally expected to be completed in two years, is nearly finished after nine months. For 2013, Faraci expects that Int'l Paper will be able to optimize the acquisition rather than continue to focus on integration. That said, he thinks cost savings on the deal will be far grater than the $350 million originally projects.

Cash flows have also been strong amid the backdrop of an uncertain global economy, Faraci said, bolstered by the company's first price increase in two-and-a-half years. Robust cash flows will help Int'l Paper continue to raise its dividend in the future.

Notably, quarterly cash flow data wasn't disclosed in its release or latest SEC 8-K filing.

Faraci said that exports from China are down 15 percent to 20 percent, but shipments within the country are strong enough for net 2 percent to 3 percent gains.

For the U.S. market, Faraci said Int'l Paper is seeing benefit as more and more consumers shop online rather than brick-and-mortar stores. He sees a strong holiday quarter for the company's corrugated products segment and improving margins into 2013 as input costs continue to decline.

Cramer agreed and continues to recommend Int'l Paper. Shares are up 0.3 percent on the session.

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