Abitibi's Silver Lining

Editor's note: This Stocks Under $10 alert was originally sent to subscribers April 20 at 12:58 p.m. EDT. It's being republished as a bonus for TheStreet.com and RealMoney.com readers.

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In our search to find new ideas for stocks trading under $10, we came across Abitibi-Consolidated(ABY Quote), one of the top newsprint companies in North America, which was recently trading at $2.82. But there's a twist to this story: The company is awaiting word from regulators about a proposed merger, and its shares would trade at about $47 if the merger is completed, according to the terms of the deal. (Abitibi shareholders get .06261 shares of the new company per ABY share.) This adjusted price would be higher than our Stocks Under $10 threshold, and so we can't include Abitibi in our model portfolio. However, we'd still like to take a look at this name.

The newsprint market has been in a secular decline for most of this decade, notably in the advertising space. According to the Newspaper Association of America, an industry trade group, online advertising is expected to grow 25% while print advertising is forecast to decline 2% in 2007. ...