International Paper: Extreme Restructuring

This gigantic forest products company has sold or will sell many operations and assets to reinvent itself as a maker of packaging and uncoated paper.

Exactly four years ago, as the stock market emerged from a long dark period, International Paper traded for $34.80 a share. On March 7, 2007, IP (symbol IP) closed at $34.90. You're not looking at typos. The stock is up a dime over the past four years. And there wasn't much up-and-down action for traders to exploit, either. The more things changed in the market, the more they stood motionless for investors in IP.

Despite the expanding economy, paper is a tough business. Weak demand and wide substitution of cheaper grades hurts, as well as pressure from e-mail and online publishing. Orders for newsprint (not one of IP's businesses) are sinking. Plus, rising energy costs clobber this industry. No wonder many of the stocks in the paper and forest-products sector appear both cheaply valued and deeply out of favor, says manager Peter Langerman of the bargain-hunting Mutual Shares fund.

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Jeffrey R. Kosnett
Senior Editor, Kiplinger's Personal Finance
Kosnett is the editor of Kiplinger's Investing for Income and writes the "Cash in Hand" column for Kiplinger's Personal Finance. He is an income-investing expert who covers bonds, real estate investment trusts, oil and gas income deals, dividend stocks and anything else that pays interest and dividends. He joined Kiplinger in 1981 after six years in newspapers, including the Baltimore Sun. He is a 1976 journalism graduate from the Medill School at Northwestern University and completed an executive program at the Carnegie-Mellon University business school in 1978.