Orchid Paper: Not Exactly A Household Name Like Apple, But Check Out This Performance

| About: Orchids Paper (TIS)
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Do you get stock tips at the water cooler at work? Read Barron's on the weekends? Check-up on Investor's Business Daily? Listen to CNBC?

Ideas come at us from all directions. In fact, there is a barrage of ideas out there and I have found that over time most of these ideas contradict one another. Not to mention that sorting through all of the ideas can be a mess!

I'm a very methodical person-I like to sort through all of the information and gather evidence on my own. And I believe you have to sort through the ideas in a very quick manner. Let's get right to the bottom line.

I run ideas through my sifting process and I keep it as simple and easy as possible. When I hear an idea, I first look at the stock chart, and then I look up the performance and valuation of the stock and see where they rank against all of the other stocks.

In fact, as a professional money manager I had to invent my own system for helping me do this in a very timely manner. The whole purpose was to be quick in getting through a big field of information as quickly as I can on a daily basis. It helps me pick up any subtle changes such as new asset classes, or sectors, or stocks rising, or falling out of favor, etc.

Let me give you an example. Several days ago, I started my day as I usually do. Before doing my daily radio show, I was going through all of the news on all of the stocks that I could possibly find. Now a lot of times I see symbols that I am not familiar with, and if they are not already in my database of stocks, I add them.

On this day, I stumbled upon (NYSEMKT:TIS), an unfamiliar stock symbol to me that had reported earnings in the morning. TIS is the symbol for Orchids Paper Products. I had never heard Jim Cramer or Bill Ackman talking about them, nor had I seen billionaire Carl Icahn bidding for the company in a proxy battle. I simply stumbled upon it checking out earnings reports and news in the morning!

Here is what I did know about the stock: It falls into the miscellaneous (consumer staples) sector and its market cap is a mere 220 million dollars, so it is a microcap stock and microcaps are doing very well this year. In fact, they are a leading asset class in 2013.

As far as its risk profile, I placed TIS in my growth and income portfolio because it also pays a 5.1 percent dividend.

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Data from Best Stocks Now App

I did not know anything about the stock's performance or valuation, however. This is vital information in my stock assessment process.

After the market closes every day, my database gathers all of the new data: new closing prices, new earnings estimates, new historical data, etc., and it crunches the numbers using the formulas that I've embedded into that process.

A few hours later, out come the new rankings (1 to 3500) of all the asset classes, sectors, and stocks that I follow. Now believe it or not, there is not a lot of movement from day-to-day as trends can stay in place for a long time. The current general trends in the market have been in place all year long.

During my cursory look at TIS, I could tell that its numbers were going to come out very good. Here is why.

Let's begin with a very impressive three-year stock chart. The chart is almost always the first place I look when I hear about a new stock that I know very little about.

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With a chart like this, why hadn't I already heard about this company in the mainstream media? Well, it is not exactly a glamorous company. manufactures tissue paper, paper towels, bathroom tissue, and paper napkins for the consumer and at-home markets. Maybe nobody whispered it to you at the water cooler but you could have found it while blowing your nose!


Let's next look at the performance of the stock for its shareholders over the years:

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Data from Best Stocks Now App

From a performance point of view, over the last five years has delivered almost an average of 34 percent per year to investors. Over the last three years, it has delivered 30 percent; it has almost doubled the returns of the market! Over the last 12 months, TIS is up 73 percent; I wish I would have found this stock earlier!

Where has the mainstream financial media been?

While relative performance and a healthy stock chart are very important, I still do not want to pay up for stocks. What about the valuation of the shares?

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Data from Best Stocks Now App

The company is trading at just under 16 times forward earnings, which is a discount to the overall market. There is not a whole lot of analyst coverage on the stock, but I did some research on its history and most recent quarters in order to determine a fair growth rate.

I came up with a 10 percent growth rate. By extrapolating current earnings out over the next five years at this rate, and then applying an appropriate multiple, I come up with a $49 dollar 5 year target price. The stock is currently only trading at 28 dollars. It also offers a 5 percent yield so even if the stock goes nowhere you are still going to get a pretty good dividend.

It passes my valuation test-it comes in at "A". It also passed my performance test.

In fact, of the 3,511 stock in my database, comes in at number #75 overall. Growth and Income clients at Gunderson Capital Mgt. are now long the stock.

Data from Best Stocks Now App

I will take a group of dividend payers like this any day of the weak over bonds for my income investors. In fact, I have had NO exposure to a bond market that is now down more than 12% so far this year!

I am glad that I stumbled upon this stock! If you would like to see the recent analysis of the stock that I did on my daily show, click here.

Disclosure: I am long TIS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.