Matthew
Frankel of SeekingAlpha.com, a Website for stock market news and financial
analysis, has picked North America’s largest printing company, R. R. Donnelley
and Sons Co. (RRD), as a contender for 2013’s high-yielding Deal Of The Year.
Among
the things he likes about the company are its strategies to lower its cost
structure, improve the quality of its products to stand out in the industry,
and grow by acquisition. (It has
acquired nine companies since 2010.)
He
predicts: “RRD is expanding by
capitalizing on the exit from the market of smaller, weaker competitors. As RRD
acquires smaller printing firms and expands, the company will gain market share
as it leverages its geographic and product breadth in its favor. Operating
margins in 2012 and 2013 will be helped by increased productivity and cost
synergies from its recent acquisitions, and its revenues will rise slowly but
surely.”
Especially impressed by RRD stock’s “insanely cheap” valuation (currently around $9.00 per
share), Mr. Frankel writes:
"RRD has paid out $1.04 a share annually
every year since 2004. Analysts are projecting earnings of $1.87 this year,
$2.00 next year, and 5% growth from there, so do the math. For this reason,
analysts have an average 1-year price target of $13.25 on the company, which is
6.7 times projected 2013, well below RRD's historic valuation levels. This
represents a 45.8% upside potential over current levels, and I believe this
target to be very conservative. If RRD meets analyst expectations and turns in
a few more positive quarters, I think the stock will gravitate toward the lower
end of its historic EPS multiple, around 8.5 times earnings. Based on projected
2013 earnings, this translates to a target of $17."
See
his full analysis at:
http://seekingalpha.com/symbol/rrd/
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