International Paper Still Undervalued (IP)

Corrugated cardboard isn't very exciting, but for investors looking for a value play, it could be just what they are looking for. Corrugated-box shipments in the U.S. rose 2% in the first quarter, following a 3.5% rise for all of 2010. This is the first sequential increase following a yearly advance since 1994. This rise in corrugated traffic will undoubtedly benefit International Paper (NYSE: IP), the world's largest paper and packing company.

The strengthening U.S. and global economies are helping boost demand for containerboard used in packaging. Inventories have peaked and capacity is running at 3 year highs. According to analysts, already stretched supplies will most likely lead to price increases of about $50 a ton on containerboard by this summer.

International Paper's reported robust first quarter earnings as a variety of product lines demonstrated good performance. With the global pulp and paper market continuing to strengthen, analyst's estimate that shares of IP could deliver nearly 40% upside over the next year.

Shares of International Paper currently trade at a cheap P/E of 13 and offer a strong dividend yield of 3.3%. Even if shares don't surge, the stocks strong dividend could provide a cushion in today's sideways moving market.