Sometimes the profound truths are the easiest to
This is particularly true when it comes to
. Many investors make the process much more difficult than it
needs to be. At its core, investing is a simple process governed
by a few irrefutable axioms.
based on what you already know is one of these simple yet
profound truths. I first heard this rule articulated by Peter
Lynch, the superstar manager of Fidelity's Magellan
. Lynch wrote one of the best books on the
, "One Up On
," in which he stresses this simple investing rule.
also repeats this mantra whenever he is asked what to invest in.
I learned this several years ago when I interviewed Rogers while
he was running on a treadmill -- an interviewing first for me --
in his home gym. When I asked if he cared to share any investing
tips, he replied, "Look around you -- what do you see?"
I saw racks of dumbbells and a pitcher of orange juice, among
many other things. I must have had a perplexed look on my face
because he said, "Invest in items you use every day, because if
you use them, it is very likely everyone else does."
I was hoping for specific tips to pass along, so I was
disappointed he wasn't willing to share any insider-type
information -- but after further consideration, his suggestion
struck me as profound. I remembered it was the same advice Lynch
offered in his best-selling book.
Since then, I have integrated this idea into my
choices. Recently, I took an extreme look at the concept.
Drilling down, I asked myself: What single item do I and nearly
everyone else on the planet use on a daily
My first and obvious answers were air and water. Aside from a
making a market in
and the water company utilities, there wasn't much exciting news
there. No one has figured out how to
the air we breathe, so that
hit the skids, too.
Finally, I thought of toilet paper as being the single item
used by most everyone on a daily basis. Everyone from the
wealthiest people in the world to the most downtrodden use this
product at least once per day. The average person uses 20,805
sheets of toilet paper a
, according to online retailer ToiletPaperWorld.com.
My next step was to locate
in this industry. One company stood out above the rest as a top
performer with plenty of
. That company is
Orchids Paper Products Co. (
||© 2013 Orchids Paper Products
Orchids Paper markets directly to consumers under
a variety of names, such as Colortex bathroom tissue.
Founded in 1976, Orchids Paper's product line consists of
bathroom tissue, paper towels and paper napkins. The company
markets directly to consumers under a variety of names through
assorted types of stores. It also sells "parent rolls" wholesale
to firms that label and market under their own brand names.
Orchids boasts a
of just over $216 million, annual
of nearly $101 million and
of $22.6 million.
of TIS have risen 55% over the past 52 weeks, which compares with
the S&P 500's
of just less than 16%. Orchids' other appealing metrics include
the more than 28% of
, and the forward annual
isn't shabby at 5%.
The company reported record
of $29 million in the second quarter, and
) climbed 27% to over $6 million.
was solid, with
Robert Snyder estimating that converted product shipments in the
second half of 2013 would be at an annualized run rate of between
8.6 million and 9.1 million cases.
What really attracted me to this company is the technical
picture. Shares have been in a solid uptrend since April 15. The
stock has recently hit
in the $28 area and is building a base.
Risks to Consider:
This company certainly fits the "buy what you know" axiom.
However, like all other stock investments, it is not without
risk. Always be certain to diversify and use stop-losses when
Action to Take -->
I love this stock on a breakout close above $28. My nine-month
target price is $33, and the initial stop level should be just