Fortress Global Enterprises Inc (FGE.TO) Buy,…

Fortress Global Enterprises Inc (FGE.TO)

0.02

-0.00 (0.00%)

as of Jan 17, 2020, 9:00:00 pm Market Open.

10 watching

COMMENT

Paper in industrial quantities is enormously sensitive to volume and pricing. It is still well above where it was because of the success in getting cheap capacity. Recent news makes it more optimistic but it is all dependent on there not being a major slowdown in the products it makes.

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WATCH

Very interesting company but has disappointed people lately. 3 units include 1) European currency, which is very problematic, 2) wallpaper for Europe and 3) a dissolving pulp plant, which they may grow. The last one is attractive as it is basically a competitor to cotton as it is used to make rayon.

TOP PICK

Top Short This stock is breaking a lot of support. If it continues to drop, ($25 is a key level) you can see $20 on it pretty quickly. Current level is not a trading range but is a pause until the next downturn happens.

DON'T BUY

Seasonality is over for this stuff. Getting closer to its low of $23.80 last August which is a place you could put a marker in if you own. There are better names.

STRONG BUY

Specialty paper/chemical company, which makes pulp into rayon. Likes this lot. Stock has corrected because of market sentiment against commodity related stocks. Also, the company is a couple of quarters behind. Should be at 90% of production by the end of June. 2nd mill goes on line at the end of 2013. Low-cost producer. Reasonably good balance sheet. Trading at about 4-5 times expected earnings. Should free cash flow $6-$7 a share starting June 30. Worth $60-$70 and going to over $100 in the next 3 years.

BUY

Likes the company. They are in the penalty box until they get a mill in Quebec going. Company looks to be cheap on a growth play. You need patience until second quarter this year and see all their pulp revenues come through. Thinks they have hidden assets.

COMMENT

There is some really good support at around $34 with some resistance at around $45. If you own and it got above $45, he would add more.

TOP PICK

Not a paper company. Produce dissolving pulp. Used for Rayon. Rayon is a substitute for cotton. 6x free cash flow. By middle of this year should be at a run rate of $6. 17% earning yield. Announced second plant in Quebec for end of 2013. Could add $5 a share of free cash flow. Could be over $100 in 2 to 3 years.

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COMMENT

New plant they are buying and converting looks quite interesting. PE on a trailing basis is about 10X. ROE is interesting at about 20%. His Quant system does not rate it well because near-term earnings are declining dramatically. Was $.38 last year and the most recent quarter in November was minus $.51. If they can get it together, growth rate in earnings should be pretty good.

COMMENT

Chart shows it had a down trend and it is breaking out.

COMMENT

Lumber has eeen decent and has moved up with the housing stocks. Chart shows lower lows, which is pretty positive. There will be some overhead resistance at around $45.

BUY

He hasn’t heard anything as to whether it is going well getting their pulp plant up and running. A difficult process of conversion, so he is hoping for the best. It is well down from amazing highs in the beginning.

SELL

He is a bit leery about anything related to the paper industry because of the problems with the Chinese on paper stocks. In a downward trend with 2 selling waves. Today's movement is just horrible.

DON'T BUY

This is a ”story” stock. Have a wonderful new dissolving plant that may change the way paper and clothing work. Until they get it up and running and prove that they have 3 to 5 years of growing earnings, he won't buy.

COMMENT

They are about to launch production on dissolving pulp in a converted mill that they acquired very cheaply in Québec. Have some forward about 80% of their product. Have good people with great experience in the business.

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Fortress Global Enterprises Inc (FGE.TO)