REFILE-BUY OR SELL-Is Cascades worth buying after recent rally?

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By Isheeta Sanghi

BANGALORE, May 28 (Reuters) - Shares of Cascades Inc (CAS.TO: Quote, Profile, Research) have more than doubled from their March lows, helped by strong quarterly results and a general uptick in the forestry products sector, but currency fluctuations and falling prices may prove to be roadblocks for the paper and packaging company.

Cascades' blow-out first quarter has largely been tied to higher selling prices, lower raw material and energy costs, and the depreciation of Canada's currency to the U.S greenback. [ID:nBNG75021]

Global demand for paper and packaging products had collapsed and led to the closure of many paper mills as the recession sapped demand from many industries the paper and packaging makers serve.

But over the past three months, shares of some of the Canadian forestry and paper companies, including Domtar Inc (UFS.TO: Quote, Profile, Research), International Forest Products (IFPa.TO: Quote, Profile, Research) and Stella Jones (SJ.TO: Quote, Profile, Research), have risen sharply, helped by lower raw material costs.

Has Cascades' stock peaked for now or is there more value to be extracted from investing in the environmentally friendly Canadian paper company?

BACK TO EARTH

Cascades remains sensitive to external factors, including currency fluctuations and prices of natural gas and recycled paper, Desjardines analyst Pierre Lacroix told Reuters.