Opinions
The Monthly Gems by Allan Tong
Mativ Holdings Inc.
MATV-N
TOP PICK
Sep 07, 2022
$24.250
Stock price when the opinion was issued
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BUY ON WEAKNESS
Created last year from a merger and is impressive a speciality materials and packaging company. Yes, it is cyclical and tied to the wider economy. That's why it was hammered last year, especially last November despite 12% organic sales growth. However, they offered a discouraging forecast. Since then, it's bounced over 20%, part of a broader move among materials, because the Fed may stop tightening sooner than expected. Last Wednesday, the CEO insists two-thirds of the business can resist a recession. Could be acquisitions coming. MATV isn't an exciting story, true, but they make money. Trades at only 8x this year's PE and pays a 6.3% dividend, which may be too high for some investors (they doubt the yield will hold). If you expect a hard landing, MATV isn't for you, but if you see a soft landing, MATV is for you. The overall market is a little overbought, so wait for an entry.
INDUSTRIAL PRODUCTS
ZIM pays a hefty 6.72% dividend yield though at a payout ratio of 69%. Reasonable, but the basic materials sector averages around 27%. Mativ trades at 9.77x PE, nearly half of 17.33x nearly a year ago. Also, ZMI trades at a relatively low beta around 0.89.ZMI is dealing with inflation by passing on supply chain cost increase to customers. Take note, though, that ZIM has missed three of its last earnings, and that business will likely slow should we fall into recession.