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Michael Simpson, CFA KP Tissue Inc KPT-T HOLD Jul 25, 2018

This company produces paper towels and other paper products. The rising cost for pulp has hurt their bottom line. China is buying more pure pulp fibre and this is hurting their business. Yield 7.4%. (Analysts’ price target is $11.00)

Michael Simpson, CFA

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$9.690

Stock price when the opinion was issued

Consumer Products

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Consumer staples. He was taking a look at it when it pulled back He stayed away because the chart is telling him there is no clarity on share price given that input costs are on the rise. It is too early to buy.

DON'T BUY

A down trend with resistance at $10. It could move back up, but there's nowhere to hang your hat on this chart. There's no base in the price.

WATCH

Is the dividend safe? He doesn't know, but they have many troubles lately with low pulp prices and writedowns. The 8.7% yield isn't exactly safe. They're building a new plant in Sherbrooke to improve profitability. Hang onto it, but watch if that dividend rises.

WATCH

It bottomed in November and flat lined. It has resistance at $8.66 and the fact that we are through it is pretty positive. Watch to see if it holds and if it gets above the moving average. It's at a pretty critical juncture.

WATCH

Since early august we had a more parabolic move up. We want to keep that on trend so in a corrective move you want it to stay on the trajectory.

DON'T BUY

A small-cap that owns an interest in tissue paper, a commodity. Pays a high dividend but also high payout, so a strong risk of a dividend cut. How long can they sustain that dividend and how deep will they cut it?

WATCH

He owned this in the past. The stock has really picked up last year. The problem is that it has no power over the input price. They have made a bet in building a plant in Quebec and the balance sheet is stressed.

HOLD

A good stable share price but mediocre on price momentum and valuation.

DON'T BUY

Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research

KPT is a $101.6M company that pays a high yield of 7.1%. Its valuation is decent, but its balance sheet has been contracting for several years now. It's considered a consumer staples name, but we are not very impressed by the fundamentals or financials. Decent growth is expected over the next two years, but we would probably wait to see if fundamentals materially improve before investing here, given its negative momentum and contracting fundamentals.
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Michael Simpson, CFA KP Tissue Inc KPT-T HOLD Jul 25, 2018

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