Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Packaging Corp of America ( PKG) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Packaging Corp of America as such a stock due to the following factors:

  • PKG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $102.7 million.
  • PKG has traded 215,454 shares today.
  • PKG is up 3.1% today.
  • PKG was down 6.4% yesterday.

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More details on PKG:

Packaging Corporation of America manufactures and sells containerboard and corrugated packaging products in the United States, Mexico, Canada, and Europe. The company operates through three segments: Packaging, Paper, and Corporate and Other. The stock currently has a dividend yield of 2%. PKG has a PE ratio of 15.5. Currently there are 4 analysts that rate Packaging Corp of America a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Packaging Corp of America has been 737,200 shares per day over the past 30 days. Packaging Corp of America has a market cap of $8.0 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 1.43 and a short float of 1.6% with 1.18 days to cover. Shares are down 2.2% year-to-date as of the close of trading on Tuesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Packaging Corp of America as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • PKG's revenue growth has slightly outpaced the industry average of 4.8%. Since the same quarter one year prior, revenues rose by 13.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, PKG's share price has jumped by 30.49%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, PKG should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • PACKAGING CORP OF AMERICA has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, PACKAGING CORP OF AMERICA reported lower earnings of $3.99 versus $4.52 in the prior year. This year, the market expects an improvement in earnings ($5.33 versus $3.99).
  • The gross profit margin for PACKAGING CORP OF AMERICA is currently lower than what is desirable, coming in at 28.40%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 6.86% is above that of the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Containers & Packaging industry. The net income has significantly decreased by 56.6% when compared to the same quarter one year ago, falling from $227.03 million to $98.50 million.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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