Packaging Corp - PKG - oversold and cheap

24 de fev. de 2016

I'm working on this long term analysis of the cardboard box company PKG. Sheer panic in the stock is setting up a low risk entry for long term investors. It's trading at 10 times or 10% earnings yield (roughly). By the end of February it "could" lose it's downside momentum on the monthly chart. January had a large decline and February so far has a much smaller range, so the momentum is weakening to the downside.

Keep in mind that PKG did "triple" in price from 2012-2015 in a very steady manner. So now it is shaking out those investors who fell asleep at the wheel paying 2 times sales for a boring cardboard box maker at the peak of its move.

Now that it has fallen almost in half, it is trading at 75 cents on the dollar of sales and is nicely cash flow positive and in a boring, yet stable to growing business. 2 times sales is so ridiculously expensive - but 75% of sales is so ridiculously cheap.

I placed a technical target back up at the consolidation price around $62 per share. I put the stop down around $38. The last sale is $46.39 last at 11:10AM EST.

Clearly this is a longer term trade setup.

Tim

17 de mar. de 2016

Nota

Monster winning trade so far. It is nearly up to the target, up more than 20% in a short time. Raise the stop to a 10% profit if stopped out.

23 de jan. de 2017

Trade fechado: objetivo atingido

Solid, long term profit from this trade setup.