Shares of industrial goods manufacturer
KapStone Paper and Packaging Corporation
) scaled a 52-week high of $34.43 on Jun 23, before closing the
trading session at $32.97 for a healthy one-year return of 69.7%.
Despite its strong price appreciation, this Zacks Rank #3 (Hold)
stock has the wherewithal to continue its growth curve. The stock
is currently trading at a forward P/E of 14.9x and has long-term
earnings growth expectation of 5.0%.
KapStone Paper has been on the uptrend since it reported record
first-quarter 2014 results despite inclement weather conditions.
Consolidated net sales improved 72% year over year to $549 million,
buoyed by the Longview acquisition that contributed $227 million of
incremental revenues. Earnings per share also mirrored the top-line
performance and increased 74% year over year to 33 cents.
In order to further add more fuel to the growth engine, KapStone
Paper has taken some key steps that are likely to boost its
operating metrics. The company has increased the price of its kraft
paper by $50 per ton and is expected to rake in approximately $30
million of annualized benefits upon full implementation. KapStone
Paper is the largest producer of kraft paper in the U.S., which is
utilized for making bags for agricultural products, pet food,
baking products, cement and chemicals, and grocery bags. The
company has also upgraded two major paper machines for higher
production yields within two years.
Furthermore, in order to reduce operating costs, the company has
announced a voluntary separation plan at legacy mills, which is
likely to reduce annual personnel costs by up to $4 million. At the
same time, KapStone Paper has reduced its interest rates by 50
basis points on term loans and its revolving credit facility,
thereby increasing liquidity to capitalize on potential acquisition
Other Stocks to Consider
Stocks in the industry that warrant a look include
), each carrying a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
LIMONEIRA CO (LMNR): Free Stock Analysis Report
ADECOAGRO SA (AGRO): Free Stock Analysis Report
KAPSTONE PAPER (KS): Free Stock Analysis Report
JBS SA-ADR (JBSAY): Get Free Report
To read this article on Zacks.com click here.