Three Islands Investments

Kimberly-Clark Corp. (KMB) and Consolidated Papers Inc. (CDP)

Final Summary and Recommendation

April 9, 1995

A lump sum investment in 1990 in the common shares of Kimberly-Clark Corp. would have produced a compound annual rate of return of 10.66% if the investment was divested on April 7, 1995. A lump sum investment in 1990 in the common shares of Consolidated Papers Inc. would have produced a compound annual rate of return of 7.85% if the investment was divested on April 7, 1995. The closing prices on April 7, 1995 for Kimberly and Consolidated were $US 54 and $US 49, respectively.
[Since April 9, 1995, both Kimberly-Clark and Consolidated Papers have had a 2 for 1 stock split.]

Consolidated Papers Inc. is a well established company that specializes in coated paper. It has little or no debt. In the last nine months, prices for coated paper have risen dramatically. This price increase may not translate directly to the bottom line because Consolidated purchases 30% of its wood pulp used in the manufacture of its coated paper. Pulp prices have risen at least as dramatically in the last year. Notwithstanding, Consolidated Papers Inc. is a very solid investment and I expect an investment will produce a compound annual rate of return of 10 to 15% over the next three years.

Kimberly-Clark Corp. is also a well established company that specializes in personal care and cleaning products. Kimberly-Clark Corp. has interests in all corners of the globe. With the exception of 1992, Kimberly-Clark has maintained or improved its profitability through this last recession. Kimberly-Clark owns some well established trademarks in the personal care and cleaning products industry. I believe Kimberly-Clark is currently undervalued and I expect an investment will produce a compound annual rate of return of 12 to 17% over the next three years.


Click here to view Table 1.1 Comparative Earnings Performance.
Click here to view Table 1.2 Price Earnings Ratios.
Click here to view Table 1.3 Record of Common Dividends.
Click here to view Table 1.4 Financial Position and Capitalization.
Click here to view Figure 1.1 Balance Sheet Ratios.
Click here to view Figure 1.2 Earnings and Retained Earnings Statement Ratios.
Click here to view Figure 1.3 Combined Ratios.
Click here to view Figure 1.4 Value Ratios.

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