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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: jonnycash who wrote (59770)	8/20/2017 2:47:20 AM
From: Paul Senior	1 Recommendation Recommended By E_K_S Read Replies (1) \| Respond to of 78958

TIS. Jonnycash, TIS is followed in more detail by several posters at "Dividend investing for retirement" thread. As stated there, the company may need to have an infusion of cash. Maybe causing stock dilution. Maybe that's the reason for the stock decline -- I don't know. I see a company that trades at/below tangible book value, and is in the business of selling tissue paper that's a necessary component to modern life. My ruling reason for buying (and adding as the stock has continued to fall), is that the company has a new and modern plant coming on-line and I believe when production is up and running, the company just needs to be market competitive to sell its product. Company's been profitable in each of past ten years until now. Being in this business so long, I have to believe they have a good handle on their fixed and variable manufacturing costs, who their customers are, and what those customers want in terms of quality, cost, delivery. Possible the new plant won't produce volume expected or come on-line fast enough to keep the company from going under or crushing current stockholder. It just seems an unlikely scenario to me. Possible too that there's some other adverse news or possibilities that I've not considered. I view the stock as a reversion-to-mean play. The stock's come down from my initial buy. I'm sticking with my initial idea about the company's prospects: "(The new plant) is a $150M investment. In some past years the company has made 7% on its assets. That would be about $10.5M from the new plant on the approx 10.3M shares outstanding. I don't know what TIS's other US facility is doing, or what the contribution is from its Mexican operations. I can envision though TIS earning $1.30 sh (again) and selling at 15x. (In some past good years, the company has sold at 20x earnings.). 15x $1.30 =$19.5/sh." The stock's now under $10. Risk/reward seems very favorable here. Jmo, and I've been wrong many, many times.