Domtar Corp (USA) (UFS), GrafTech International Ltd (GTI): Four of the Best Stocks Offering Good Value

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Buying into a good company won’t mean much if you pay too much. I employ a buy-and-hold approach, but I often ask myself if I can get shares at a better value. Don’t get me wrong: I’m not trying to time the market or call the top and bottom. Rather, I simply choose to be patient when building a position. If shares of a company on my buy list are a little hot without good reason, I’ll wait for things to normalize. It doesn’t always work, but there are plenty of places to look for new money. Looking for a few? Here are four of the best stocks on my watchlists offering good value.

Domtar Corp (USA) (NYSE:UFS)

Biglari Holdings Inc(NYSE:BH)

The holding company has been featured in “10 Stocks Ideas for June” and another article by my colleague Michael Lewis. It didn’t seem to have had much effect on Mr. Market, but they certainly got my attention. The company has a market cap of around $590 million despite owning nearly $460 million in Cracker Barrel stock (a 20% stake) and all of Steak ‘n Shake and Western Sizzlin. Whether or not a new dual class structure will help bring more attention to the company remains to be seen (B shares would trade in the mid- to high-$20 range, compared with $400 per share today). However, there is definitely an undeniable value opportunity brewing for investors.

Domtar Corp (USA) (NYSE:UFS)

This established pulp and paper player is scraping against new 52-week lows despite an improving financial picture and a dividend that yields over 3%. Shrinking margins and cash-flow warrant some concern, but an improved focus on diversifying its business should help. The company has acquired four personal-care businesses in the past two years, including a recent purchase of AHP, which is the nation’s largest manufacturer and supplier of store-brand diapers. After sharing many classes in college with paper-engineering students, I could go on all day about the differences — or lack thereof — between brand name and off-brand paper products. But … I’ll spare you a detailed talk on diapers. The point is that the market is healthy, recession-proof, and bound to help Domtar Corp (USA) (NYSE:UFS) return value to shareholders in the long term.

Gevo, Inc. (NASDAQ:GEVO)

The developmental-stage synthetic biology company may soon be ready to live up to its lofty potential after restarting commercial operations. Don’t expect an overnight turnaround: It will take a few years to really ramp up its isobutanol business and gain access to more facilities. Still, revenue should jump from a measly $24 million in 2012 to more than double that in 2014.

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