Packaging Corp. Of America Wraps Up A Flat Base
Many stocks have recently formed flat bases. Packaging Corp. of America ( PKG ), or PCA, is one of them.
The flat base shows boxy, sideways trading, which PCA has done in recent weeks while receiving support at its 10-week moving average. PCA has been in a steep uptrend since hitting a low in June 2012.
PCA's latest pattern is the latter part of a base-on-base formation. Since it rose less than 20% from its prior breakout before settling into a new base, the new pattern is deemed a base on base. It's also counted as one base.
It's professional buying that can take a stock sharply higher. At the end of the second quarter, 553 funds had positions in PCA, up from 461 three quarters before that.
The Lake Forest, Ill.-based firm makes containerboard, corrugated containers, retail packing products and packing supplies. In recent years, it has a stable earnings history. The stock has a three-year Earnings Stability factor of 16 (zero is most stable, 99 is least stable) and a five-year Earnings Stability of 24.
Recent quarterly results have been solid. Profit jumped 48% and 45% in Q1 and Q2 respectively on sales gains of 12% each. Analysts polled by Thomson Reuters see its full-year profit rising 49% for the year. The estimate was revised higher recently.
PCA has boosted its dividend already twice this year. In January, the company sweetened its dividend by 25%. In May, it hiked it by 28% to the current quarterly rate of 40 cents a share. Its next dividend will be paid Oct. 15 to shareholders of record Sept. 13.
On an annual basis, PCA pays $1.60 a share for a yield of about 3%, about 50 basis points more than that of the S&P 500. PCA has the second highest yield among the 12 dividend-paying stocks in the Paper & Paper Products group.