Intertape Polymer Group

ITP-T

(A Top Pick Oct 03/17, Down 7%) They had 2 problems in their last quarter: input costs and shipping costs. It's a little economically sensitive, but now it's an attractive price.

CCL or ITP? CCL has great management and will benefit from global growth. They do labels and packaging for the big-branded companies. They're diversified and are generating a lot of free cash flow. ITP is a turnaround story. Amazon is their biggest customer. if you believe e-commerce will continue to grow then play ITP. ITP pays a higher dividend than CCL. Worries of higher input costs and a slowing economy are overblown. Sees good long-term returns from both.

The last two months of the year it normally does quite well. It has consolidated and is not moving up much here. It is in the right sector.

The current price is coming down to a base. It should hold and the indicators should turn up. Seasonality is November through June.

He thinks the dividend is sustainable. This is a Amazon play--all these packages need tape. The company received a big insurance settlement a year and a half ago and rebuilt a plant, then they got good business from Amazon and the result was booming growth. In recent quarters, there has been some disappointment. Longer term, he sees the company as well run, as one of the two largest players in the industry and he expects it will be fine. He is buying today against a $28 target price. He sees a substantial capital gain potential if a few things go right.

It has been under loved over the last year to a year and half. Their last earnings were a little light due to margin compression. Overall it is a good company. He expects more acquisitions this year. He thinks their earnings will start to move forward. It is a good value opportunity. (Analysts’ target: $23.00).

It is in the packaging space. They just acquired a packaging company. The stock has weakened recently because of input cost pressures and a facility in South Carolina that gave them some issues. They trade at a fairly low multiple compared to peers. He is doing some homework on this one because it could be a potential buying opportunity.

(A Top Pick July 6/17 - Down 30%.) Has not done as he expected to do. The story is that they built new facilities and expand in new areas. But they ran into some problems. The execution hasn’t been as good as he hoped for. Eventually he thinks it will work out, but it is taking longer than expected. He thinks the yield is safe.

They aim to be a global leader in packaging. They should benefit from e-commerce which needs boxes. They are busy building plants to meet expected demand, but it's eating their cash flow. A concern is that they buy a lot of chemicals that are made from oil (and oil prices are rising). It trades at a big discount vs. its peers. He's been buying this and expects it to return to the $20's.

This stock benefited from a run out of commodities a few years ago. There was an uptake in the success of Amazon and Google with the rise in consumer shipping. It has become too expensive now and he thinks it is not going anywhere – up or down. He would not be a buyer at these levels. He would want to see the yield back above 3.5% before re-entering.

It's been in a range spanning $3 that it needs to hold longer. He wants to see it break higher. It's trying to consolidate, which is good.

He's watching this. Packagaing companeis are doing well. It's come off recently, but ITP needs to see it sink further before he buys it. 13x forward earnings.

(A Past Top Pick on April 17, 2017, Down 14%) Had a rough year, though Q# and Q4 earnings were good. They gave guidance for 10% revenue growth and 15% earnings growth in 2018. They have a 5-7-year plan to double earnings and are doing acqusitions to achieve this. Lots of free cash flow with a decent yield. They make tapes that bind packages for the thriving e-commerce space.

(A Top Pick March 20/17, Down 3%) Some plants were flooded. They were also hit by industry-wide input costs. They continue to make accretive acquisitions. He sees upside and still has faith in it. Safe dividend of 3.5% and will even grow.

(A Top Pick April 17/17 - Down 12.5%.) He thought it was a no-brainer idea. The company benefits from e-commerce. They make the water activated tape and things that boxes use. Biggest customer is Amazon. They made a number of acquisitions recently and some are not working as they should. Maybe the market is punishing them for that. He thinks longer term is going to do OK. Valuation is reasonable.

A great little company that basically operates in an oligopoly with 3M's Scotch tape. With the move of Amazon and all the shipping, the amount of tape being sold is increasing. Instead of shipping in containers, stores are now shipping in small packages. A fine little growth company and has good management.

He has been looking at it carefully and almost pulling the trigger. Management has been making some good moves. They are launching new facilities and profits have to kick in. It is probably not a bad price right now. The last results were pretty good. They are a well managed company and the dividend is safe.

He really likes management. The dividend is safe. This business grows at about GDP. If they are able to create low cost capacity, they may be able to increase their market share slightly, but the free cash flow yield on this is relatively high. To him, the right price is below $20.

It is a well run company. They had a hiccup with one of their plants. At some point the dividend will go up. He likes the management team.

A very established company. It’s been around forever. Bought it years ago at about $3-$4, and ran it up to about $20. He likes management. Has zero interest in it now. Almost everything he buys is under $10.

In packaging goods, and they have competition. It came down in the 2^nd quarter over the summer, when there really wasn’t much volume, so earnings were not great. He’s been buying shares over the last couple of months. It’s a growing company that is going through some growing pains, to get to the next level.

(A Top Pick Oct 26/16. Down 9.85%.) Hadn’t had great earnings and it was a light volume market, so the sellers piled on. It seems to have solidified at $18 and grinding its way higher. This is something you can buy and hold and there should be some pretty decent growth.

He wouldn’t be a buyer. The closing price was $18.89, and he has a model price of $22.78, only a 20% upside. It is trading at EBV 5, a very expensive valuation. There was a negative transit back in August, and it is really struggling under that. He senses that there is a little bad news happening in the future.

Trading at $25 a few months ago and dropped down to the $19 range. He is hoping it can go back up to $25 and much higher. They warned last quarter that this was going to be a tougher year. Juggling a lot of projects and a lot of them are not delivering cash flows. They buy a lot of plastic and chemicals, and with the hurricanes in Texas and Florida, it has pushed up some input prices. They won’t be able to pass that off to customers in the short term. Expects an ugly Q3, but hopefully there will be some good communication and messaging that things are improving. For long-term investors, this is a good opportunity.

Makes tapes and fabrics, and was hit by rising prices for polypropylene. The stock took an enormous dip, and this is a tremendous entry point. It is a temporary problem.

Technically, this is not showing too much hope. Chart shows it has completed a double top pattern, and has broken down and is in a downward trend. Also, its momentum is negative. Using technical analysis, your downside risk is probably fairly minimal at these levels. At the same time, technicals do not favour an upside move in the short term.

Chart shows an old wall of resistance at around $20, which became support. It now looks to be breaking that support level, which is a bit of a bearish position. They will probably get back into the $15 range, especially if the markets get a bit soft. If he owned it, he might be tempted to Sell.

This has been the turnaround story. They had a kind of poorish quarter recently resulting in a pretty good pullback in the price, which is not justified, as they are still guiding for good earnings growth in 2017, and more in 2018. No one likes to see companies give guidance and then pull it back. It’s in the penalty box, but you are getting a great yield. Smart management.

It is an industrial with seasonal strength from mid-October until the end of the year. It is now below its trading range and is trending down. It is not as clear this year if seasonality is going to work. It will take time to repair the technical damage that has been done. Re-examine it at the end of October. You will probably be okay if you own it now.

It had a lot of structural, cost and debt issues. They changed it all, paying and raising the dividend. Now it is an income stock that is tied to the North American economy. Their last couple of quarters were a little disappointing. He would not worry about it, though.

They came a little ‘unglued’ this quarter. If you have a bad quarter this market takes out and shoots you. He likes their industrial line. He thinks they will benefit from an increase in housing. You might even double down.

A tape manufacturer, so they are going to follow a lot of what is going on with industrial packaging. A pretty well-managed company. In an environment where industrial activity and economies are improving, this company should do well.

This has tapes of all kinds. Industrial uses, home uses. But obviously they also make the tapes that bind boxes that go from Amazon (AMZN-Q), which is a growth area. They’ve done a good job of controlling costs in the last few years and consolidating their operations. Now doing some tuck in acquisitions in India, etc. for testing new markets. There is probably 20% upside over the next 12-18 months. Dividend yield of 3%. (Analysts’ price target is $29.)

There is no problem at this level. The balance sheet is in good shape. Currently it is a neutral for him, partly because Price momentum has been sideways. The value is also sideways. Expensive on a free cash flow basis and on a BV basis. If it had a few more good quarters and started showing more cash flow, it would probably end up on the Buy side for him. Dividend yield of about 3%.

(A Top Pick June 6/16. Up 27.84%.) He still likes this. It is involved in packaging and labelling, more in industrial and commercial tapes. As more people shop online, all those boxes shipped have to be taped. Trading at a cheap valuation and generates gobs of cash. Has a very nice dividend yield, and has plans to double its revenue over the next 5 years.

In 2009, this was pretty near bankruptcy. They’ve done a nice job. Have improved their operations. Return on Capital has improved to almost 6%. Unfortunately though, he can’t support the valuation.

Everything that is shipped has to be professionally taped. They have done a good job of taking their market share and expanding outside of Canada and the US. Great dividend that has grown many years in a row. (Analysts’ target: $27.75).

Doesn’t follow this closely, because it is a smaller cap name. A packaging company. Generally speaking, it is a pretty well-run company. There is a cyclicality to it. Thinks they are ramping up a new plant. You could probably hold this long-term to get industrial exposure. Well-managed.

(A Top Pick Oct 26/16. Up 4%.) This was up in the $27 range, but came back down when they were a little light on earnings. They have a tax issue where they had to refile, but it didn’t cause any changes to the overall structure. He thinks this could go to the $28-$29 range.

Packaging, but in products that are a lot more commoditized than some of the others. Management has done a great job turning the company around. Up against some 800 pound gorillas such as 3M. They are looking for “value added” products to launch in small acquisitions. They are modernizing and expanding some of the plants. Not a cheap stock, but thinks management is going to succeed.

This basically makes tapes. Designs things like Scotch tape, as well as making a lot of tape for industrial use, and for e-commerce. They control costs partially by phasing out older plants and building bigger and more efficient ones. Stock has been a little flat in the last couple of months because of flooding in one of their new plants, but that is fading away now. Dividend yield of 3.3%. (Analysts’ price target is $27.75.)

Just announced a misstatement in earnings in the last few years. The good news is, it doesn’t seem to be material. It didn’t affect their adjusted EBITDA or their cash flow, but made a mistake on their adjusted earnings number. The company is in the right space manufacturing tape and other film products, and benefiting so much from the e-commerce economy. A great dividend and generates a lot of free cash flow. Trades at a discount to some of its peers. They’ve started to expand outside North America. He is very positive on the long-term outlook.

Has owned this in the past, but got stopped out sometime last year. A Canadian name that has a bit of a lower volatility profile, so it’s one you would want to own for a long time. They have a lot of US business.

A great business with a great dividend. They are a bit of a price taker with 3M, which is his only knock against the company. However, they are offsetting that with a lot of operational improvements and some of the new plants they are putting into operation. They’ve made a few acquisitions including a recent one in India.

Makes all kinds of different tapes for packaging, but also has leverage to e-commerce with the growth in shipping. Has a lot of business in the US, and have been building new plants to lower costs and improve efficiencies. Their transition has not been smooth, having been hit by a flood and just coming out of it. When they get the plant running well, they are going to have a cost advantage and a lot more capacity. Dividend yield of 3.06%. (Analysts’ price target is $27.25.)

They have done a great job under the new management team that came in in 2011. He is intrigued by the turnaround in the business, but is concerned that they are a number 2 player in a market dominated by MMM-N. It is liable to be crushed. It is also very cyclical and although the environment in the US is good right now, their margins would suffer in a downturn. The risk/reward is just not there for him.

(Market Call Minute.) One of the smartest management teams in Canada. Terrific capital allocators. Got hurt by problems they could not foresee, but this is an interesting opportunity here.

Manufactures tape, plastics and packaging materials. About 90% of sales are in the US and Canada, but they’ve done a recent acquisition to get themselves into India, and are starting to expand more into Asian markets. They are projecting growth to go from about $780 million to $1.5 billion in the next 7 years. Dividend yield of 3.19%.