Investors often settle for lagging price performance and
shoddy fundamentals just to get a big dividend.
InPackaging Corp. of America 's (
) case, not only are you getting a nice yield, but you're also
getting solid fundamentals and relative price strength.
The company is the fourth-largest producer of containerboard
and corrugated packaging products in the U.S. It operates four
paper mills and 71 corrugated products plants in 26 states,
serving the food and beverage, paper and agricultural
Fundamentals are strong. Pretax profit margin hit a three-year
high of 14.3% in 2012. Annual return on equity was also solid at
21%. It sports an annual dividend yield of 3.2%.
In the first quarter, earnings rose 48% from a year ago to 62
cents a share. Sales rose 12% to $755.2 million. CEO Mark Kowlzan
said he expects stronger volume and higher prices in the second
quarter but said the earnings benefit from price increases won't
be realized until the third quarter.
From a technical perspective, its flat-base structure showed
several tight weekly closes ahead of Thursday's breakout over
50.88. Its recent pullback was well contained as the stock held
above its 10-week moving average. Several above-average volume
price gains point toward a stock under accumulation.
Packaging Corp. of America isn't the only strong performer in
IBD's Paper & Paper Products group. The group boasts a few
other stocks hitting new highs with solid Composite Ratings,
includingSchweitzer Mauduit (
),Albany International (
) andRock Tenn (
Earnings are due July 16 after the close. The consensus
estimate calls for profit of 63 cents a share, up 29% from a year
ago with sales up 8% to $769 million.