Have had IP on my radar for a few months. I know what you're thinking. "Why a paper company when tech has been blazing and most industrial stocks have languished. Three reasons."
1. PMI reports. Over the past three months Paper products have been one of the only industries showing growth in the ISM PMI report. Meaning they're having an uptick in orders. IP itself supplies roughly 50% of the corrugated cardboard to Amazon and has other online retailers as well. They also supply much of the bulk fiber that goes into toilet paper. Their normal order cycle even in good times is well designed to handle a short term order cycle, meaning that they are used to shifting their production to where the orders come from. My bet here is that earnings will actually be decent considering the Covid lockdowns.
2. Sector rotation. Time and time again we have seen a sophisticated sector rotation in the current uptrend in the market. Tech leads the way, but then stalls and consolidates while other "value" sectors catch up. So this is both a diversity play as well as following the capital flows. What we are seeing in the overall market this week makes me think I've judge correctly. Tech is now pulling back after, quite honestly, unrealistic gains and capital is looking for a new home. IP up 2.5% today on a very volatile day.
3. Trend analysis. The trend on IP has been very predictable and the price has bounced well every time it touched the bottom line. I'm in at $33.88 and hoping for a ride up top of the channel around $45. Curious to note on this second chart here is the long term downtrend line (in white) which the SP is just crossing. This had been some major resistance. We need a solid few days closing above to confirm it as support on a new rising trend.
Happy to hear your thoughts.
1. PMI reports. Over the past three months Paper products have been one of the only industries showing growth in the ISM PMI report. Meaning they're having an uptick in orders. IP itself supplies roughly 50% of the corrugated cardboard to Amazon and has other online retailers as well. They also supply much of the bulk fiber that goes into toilet paper. Their normal order cycle even in good times is well designed to handle a short term order cycle, meaning that they are used to shifting their production to where the orders come from. My bet here is that earnings will actually be decent considering the Covid lockdowns.
2. Sector rotation. Time and time again we have seen a sophisticated sector rotation in the current uptrend in the market. Tech leads the way, but then stalls and consolidates while other "value" sectors catch up. So this is both a diversity play as well as following the capital flows. What we are seeing in the overall market this week makes me think I've judge correctly. Tech is now pulling back after, quite honestly, unrealistic gains and capital is looking for a new home. IP up 2.5% today on a very volatile day.
3. Trend analysis. The trend on IP has been very predictable and the price has bounced well every time it touched the bottom line. I'm in at $33.88 and hoping for a ride up top of the channel around $45. Curious to note on this second chart here is the long term downtrend line (in white) which the SP is just crossing. This had been some major resistance. We need a solid few days closing above to confirm it as support on a new rising trend.
Happy to hear your thoughts.
Penafian
Maklumat dan penerbitan adalah tidak dimaksudkan untuk menjadi, dan tidak membentuk, nasihat untuk kewangan, pelaburan, perdagangan dan jenis-jenis lain atau cadangan yang dibekalkan atau disahkan oleh TradingView. Baca dengan lebih lanjut di Terma Penggunaan.
Penafian
Maklumat dan penerbitan adalah tidak dimaksudkan untuk menjadi, dan tidak membentuk, nasihat untuk kewangan, pelaburan, perdagangan dan jenis-jenis lain atau cadangan yang dibekalkan atau disahkan oleh TradingView. Baca dengan lebih lanjut di Terma Penggunaan.