Trade Alert: An Under-The-Radar Industrial

One with strong fundamentals.

Limitless Paper For A Paperless World

In the sitcom The Office, the manager of the Scranton office of the fictional Dunder Mifflin paper company makes his own commercial with the self-deprecating tagline, “Limitless paper for a paperless world”. The joke is a bit on-the-nose: paper companies are passé.

I had a similarly arrogant thought once, while working at an Internet startup and driving by a Marcal factory: my company was part of the future, and that factory was part of the past. But that factory outlasted the Internet startup (not forever: the factory burned down a few years ago).

Still Not A Paperless World

Nevertheless, thirty years after the launch of the World Wide Web, we still have paper forms, catalogs, nametags, checks, etc. It’s not exciting stuff, but it still exists, and the company we’re betting on today has solid business making it. It has no debt, and a profit margin better than 80% of its industry competitors. Some additional characteristics of this stock:

• An Altman Z-Score of 8.5 (scores over 3 indicate financial strength).

• A Piotroski F-Score of 8 (on a scale from 0-9, with 9 being the best).

• A Profitability rating of 8 (out of 10; data via Chartmill)

Our trade will make money if this stock gains about 8% by January, and the max upside is about 7x the max downside.

Details below.

Our Bullish Trade