This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

Cut Positions in Paper Stocks

Stocks in this article: CLWFBRGLTIPKSNPRFPSWMUFS

NEW YORK ( TheStreet) -- In the game "rock, scissors, paper," scissors cut paper, and that's what investors should do with the sell-rated names in the paper and paper products industry.

The only undervalued sector among 16 sectors covered by ValuEngine is basic materials, undervalued by 7%. Unfortunately for investors, it is difficult to find value stocks within the sector. Out of 416 companies only 14 have buy ratings. There are 155 stocks rated sell and another 60 rated strong sell. With 51.7% of all stocks rated sell, I give the basic materials sector an underweight rating.

When you drill down to the industries within the basic materials sector the valuations are quite divergent. The cheapest industry is gold mining, undervalued by 34%. The most overvalued industry is paper and paper products overvalued by 31%. There are 32 stocks in this industry and 23 have sell or strong sell ratings. With 71.9% of these stocks rated sell I give the industry an "avoid-source of funds" rating.


Today I provide my buy-and-trade parameter for nine paper and paper products stocks with the strategy to sell strength on these names, particularly for the five stocks rated sell. All but one of these stocks are overvalued and eight have gained between 18.4% and 73.2% over the last 12 months, which justifies profit-taking particularly with seven of these stocks projected to decline by 3.5% to 9.7% over the next 12 months.

Eight of the nine stocks are above their 200-day simple moving averages (SMA), which reflects the risk of a reversion to the mean. Note also that five of the nine stocks missed earnings estimates.

Reading the Table

OV / UN Valued -- The stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage, according to ValuEngine.

VE Rating -- A "1-Engine" rating is a Strong Sell, a "2-Engine" rating is a Sell, a "3-Engine" rating is a Hold, a "4-Engine" rating is a Buy and a "5-Engine" rating is a Strong Buy.

video platformvideo managementvideo solutionsvideo player

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,828.24 +0.49 0.00%
S&P 500 2,067.56 -5.27 -0.25%
NASDAQ 4,791.63 +4.3130 0.09%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs