Cramer: International Paper ‘ludicrously’ cheap
(Click for video linked to a searchable transcript of this Mad Money segment)



*This post was updated on September 17th. An earlier version incorrectly stated that Packaging Corp. acquired Boise Cascade when the company, in fact, acquired Boise Inc.

New developments involving a rival have Cramer convinced that International Paper is a screaming buy.

Specifically, Packaging Corp. of America said it would acquire the smaller Boise Inc for about $1.28 billion, a premium of 26% to Boise's Friday close.



Although most published reports focus on the way in which the deal is expected to increase Packaging Corp's container board capacity, Cramer thinks the bigger takeaway for investors is something entirely different.



"What I think really matters here is that this transaction takes out a bunch of additional capacity. That's a huge deal in this space," Cramer said, because it's not the only development reducing capacity.



"Last week, we learned that International Paper is shutting down its paper mill in Courtland, Alabama. And last month Georgia Pacific said it would close down parts of its mill in Crosset, Arkansas.



In a case of what's bad for Main Street being good for Wall Street, these closings will reduce supply, industry-wide. In turn, reduced supply should generate higher prices ultimately boosting the bottom line.

That's bullish for shareholders therefore Cramer says "I would have expected IP to rally on the Packaging Corp acquisition but it didn't. That's a mistake."



And although Cramer thinks the supply decrease is a significant catalyst for IP, it's hardly the only catalyst.

