
A Small-Cap That's Ready to Roll

By Steve Gear
About this article:
Investors looking for high cash flow, revenue stability and long operating histories often look to tobacco companies; the steady nature of cigarette consumption gives producers highly dependable (if not always growing) revenue streams. Yet there is another "upstream" play on tobacco that is not as well known. Schweitzer-Mauduit International is the largest producer of cigarette papers in the world. The company's strong market position, recent restructuring and new product leadership should drive profitability and create new opportunities in 2009.
Hot Trends
Schweitzer is positioned for growth in the emerging lower ignition propensity, or LIP, cigarette market. Cigarettes using LIP paper burn out if they are unattended and have less burn on outer areas, which make them less likely to start fires and cause injury. Twenty-two U.S. states representing 40% of the U.S. cigarette market have enacted regulations mandating LIP use starting in 2009. Within the next 24...

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