Canadian Private Label Tissue Company Identified as Upside Opportunity by Mary Throop and Kevin Elliott, Partners at Summerhill Capital Management

Wall Street Transcript

67 WALL STREET, New York - February 12, 2013 - The Wall Street Transcript has just published its Investing in Canada Report. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Investing in Canada - Long-Term Investing - Canadian Dollar Investing - Value Investing

Companies include: Wal-Mart Stores Inc. (WMT), Baytex Energy Trust (BTE), Canadian Natural Resources Lim (CNQ), The Bank Of Nova Scotia (BNS), Toronto-Dominion Bank (TD), Royal Bank of Canada (RY) and many others.

In the following excerpt from the Investing in Canada Report, two award winning asset managers discuss their methodology for selecting securities for their portfolios:

TWST: What are some of your top investment picks right now in the Canadian equities market?

Mr. Elliott: We don't necessarily talk in terms of top picks. We look at each security in the context of the overall portfolio, and every stock is in there for a reason. An example of a stock we like would be KP Tissue (KPT.TO), which is a subsidiary of Kruger Paper. It's a Canadian company that manufactures the top Canadian tissue brands and is Canada's dominant player. It is a recognizable brand, has very consistent margins and is currently expanding into the U.S. market as a private label supplier to Wal-Mart (WMT). This is a big opportunity to double the company's EBIT over the next five years.

The company pays a large dividend, close to 4%, trades at a very reasonable valuation multiple, and they have a very strong competitive position in Canada from which to launch their offensive into the U.S. The private label opportunity in the U.S. tissue market is interesting, because the market is dominated by very large branded companies that aren't in a position to retaliate by dropping prices and discounting. It's not a widely held name in Canada. It's a company that is just starting to get some research coverage.

TWST: Are there any other examples you'd like to share?

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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