You’ll receive your new Investment Digest issue this afternoon. First, today’s Daily Alert, featuring a new growth stock recommendation from Upside.
“Schweitzer-Mauduit International, Inc. (SWM, $38), a leading global supplier of products to the tobacco industry, is being upgraded to Best Buy. Core products include cigarette papers and reconstituted tobacco leaf sold to most major tobacco companies. Increased adoption of lower-ignition-propensity paper, which enhances safety by reducing the likelihood of accidental fire, should sustain near-term sales momentum. In addition, cost reductions via lean manufacturing initiatives should bolster profit margins.
“Armed with strong cash flow, Schweitzer is positioned for growth, particularly in Asian markets. For the 12 months ended September, cash provided by operations more than doubled to $166 million, while free cash flow surged eightfold to $125 million. For 2012, per-share earnings are expected to increase 11% to $3.62. Revenue should be flat. Next year, the consensus calls for a 10% profit increase to $3.97. So far this year, the stock has climbed 12% and trades near a 52-week high. But strong operating momentum and a modest valuation point to further gains. The stock, trading at only nine times estimated 2013 earnings, earns a Quadrix Value score of 88. Schweitzer, yielding 1.6%, is a top pick.”
- Richard J. Moroney, Upside, December 3, 2012