Rock-Tenn (RKT)--Might Just be Rockin!

"Rock-Tenn Company (RockTenn) is a manufacturer of packaging products, recycled paperboard, containerboard, bleached paperboard and merchandising displays. The Company operates in four segments: Consumer Packaging, Corrugated Packaging, Merchandising Displays and Specialty Paperboard Products. The Consumer Packaging segment consists of facilities that manufacture coated paperboard products and convert paperboard into folding cartons. The Corrugated Packaging segment consists of facilities that manufacture containerboard and produce corrugated packaging and sheet stock. The Merchandising Displays segment consists of facilities that produce displays. The Specialty Paperboard Products segment consists of facilities that manufacture specialty paperboard and convert paperboard into interior packaging, convert specialty paperboard into laminated paperboard products, and facilities that collect recovered paper."

--Reuters

Rock-Tenn came up on my stock screener when I was searching for divergences in stock performance vs. underlying value. I was essentially looking for companies with favorable earnings growth, but low P/E. Great ROE, but low P/B. Good cash flows and liquidity but a declining stock price:

 I ran a DCF valuation and came up with a fair value of approximately $70/share. This was assuming 10% FCF growth over the next 10 years, 1% terminal growth rate and 15% discount rate. The stock is currently priced at $49.81...providing a 28% margin of safety.

I've also been using a few simple technical indicators to find a good entry point so that I won't have to dollar cost average the stock:

Basically, I saw that $48.00 was a good support point which held up in late September. There was also a considerable amount of volume at price ranges above $48 which could move the stock even higher. Currently, $49.81 might just be a solid entry point for a long term, buy/hold strategy.