Seems to be getting harder to find good deals, I think this was the toughest sector so far. I don't own any of the stocks this time, but I think there is some decent potential in a few.
The stocks I found in the
materials sector were kind of obscure as none of the more well known companies are at good values now. I ended up going with Albemarle (ALB), Eastman Chemical (EMN), International Paper (IP), Rock-Tenn (RKT), and Reliance Steel (RS).
Nice article, Eric. I left my comments there.
(04-10-2014, 10:50 PM)Dividend Watcher Wrote: [ -> ]Nice article, Eric. I left my comments there.
Thanks, I appreciate the feedback.
I recently added IP to my tracking list. Will likely add at some point.
I bought IP last year because it looked good on paper (no pun intended), and because MCD is starting to transition away from styrafoam cups and into paper, which I hope is a secular trend.
Then I decided to do more due diligence and read the morningstar and S&P reports, and the investor presentation (which doesn't mention anything about MCD's cups), and I couldn't figure out where the high EPS growth estimate comes from. The top line growth is very slim and the difference between the top and bottom line estimate is too wide for me to believe that it will come from margin expansion. The bull case says that cardboard boxes are going to be the new brick & mortar as everyone has everything shipped, but I consider that speculation. There's also the secular headwind of digitization. Eventually I decided I don't have enough conviction, and I sold it for a small profit.
I have to admit, I don't really understand the secular trend on why so many paper companies are doing good, but looking at IP, RKT, KS, TIS there seems to be an upward trend in the sector.