Opinions
Michael Sprung
Cascades Inc
CAS-T
BUY ON WEAKNESS
May 30, 2018
$12.450
Stock price when the opinion was issued
east coast forestry
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Stockchase Research Editor: Michael O'Reilly This North American producer of packaging and tissue products recently beat earnings estimates by 50%. It trades under book value and only 7x earnings -- good value here. Its dividend is strong and growing, backed by a payout ratio under 40% of cash flow. We recommend placing a stop-loss at $8.00, looking to achieve $13.50 -- upside potential over 38%. Yield 5.3% (Analysts’ price target is $13.31)
east coast forestry
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They've been hit by a lot of input costs, which may be easing now. It's hard to raise prices on tissue paper and costs have been rising on recycled fibre. Their new container board factory will operate soon. CAS is selling at the low end of its range historically. But be patient until the stock price doubles or even triples.
(Analysts’ price target is $9.83)
east coast forestry
HOLD
Likes it, though shares have been down the past year. They fixed their operational issues. Demand remains strong in container board, and they opened a facility in Virginia which could raise margins. They sold their European division, so are more streamlined in operations. Pays around a 4% dividend. Still likes it.
east coast forestry
He has been watching this closely. It trades below book value, which has historically been a good buy signal. They have had some operational issues, but their input costs have been going down which should overall improve margins. Container board sales have not been as strong as hoped. The tissue industry is also somewhat oversupplied right now. Buying under $12 is a good area, where he thinks it would go back to $15 to $18.