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Validea's pick of the week provides a detailed report on a company that scores well in the stock-screening service's model portfolios. On Validea.ca, investors can analyze 1,000 Canadian stocks through 12 different guru-based models and get individual reports on each company. Globe Investor has a distribution agreement with Validea.ca. Try it.
More than 100 years old, Neenah Paper Inc. makes premium, specialty and sustainable papers used for premium writing, text, cover, digital and specialty needs. It's market cap is $950-million (U.S.).
Neenah has grown earnings at a 20.2-per-cent pace over the long term (based on the average of the 3 and 4 year historical eps growth rates using the current fiscal year eps estimate), which the Peter Lynch based model likes. The company gets strong interest from the Lynch model, in part because of its 0.85 PE-to-growth ratio.
Neenah has reasonable 64 per cent debt/equity ratio. Inventory to sales for was 12.72 per cent last year, while for this year it is 11.97 per cent. The Lynch model sees that as a sign its products are in demand.
The company gets strong interest from the James O'Shaughnessy-based growth model, thanks to its combination of good momentum (83 relative strength over past 12 months) and reasonable 1.06 price/sales ratio. It has increased annual EPS before extraordinary items for the last 5 years, which the O'Shaughnessy-based model likes.
Neenah has a 20-per-cent return on equity. It has a 2.7 current ratio, a sign of good liquidity, according to the Benjamin Graham-based model.
John Reese is long NP.
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