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Clearwater Paper (CLW - Free Report) , a Zacks Rank #1 (Strong Buy), is a long-term stock market winner within the Zacks Basic Materials sector. CLW is currently breaking out to its highest price level this year, all while most stocks hover in bear market territory. The company’s longevity and continued stock price ascent speak to management’s ability to adapt to the ever-changing market landscape. The Basic Materials sector is currently displaying some favorable characteristics as shown below:
Image Source: Zacks Investment Research
CLW sports the highest Zacks Momentum and Growth Style Scores of ‘A’. The company is part of the Zacks Paper and Related Products industry group, which ranks in the top 16% out of more than 250 Zacks Ranked Industries. Also note the favorable metrics for this industry group below:
Image Source: Zacks Investment Research
Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1.
It’s no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market. By focusing on leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our stock-picking success. Let’s take a deeper look at this top-rated stock located within a leading sector and industry group combination.
Company Description
Clearwater Paper manufactures and supplies bleached paperboards and parent roll tissues globally. The company offers folding cartons, liquid packaging, cups and plates, softwood pulp products, and commercial printing items. CLW also provides at-home tissue products, including paper towels, bath tissues, and napkins.
The paper manufacturer sells its products to retailers and wholesale distributors, including grocery, club, mass merchants, and discount stores. Clearwater Paper was incorporated in 2005 and is based in Spokane, WA.
Earnings Trends and Future Estimates
CLW has built up an impressive earnings history, surpassing earnings estimates in three of the last four quarters. The company has delivered a +28.76% average earnings surprise over a trailing four-quarter period.
The CLW growth engine is expected to remain hot this year, as analysts covering the paper company have increased their Q3 earnings estimates by 31.03% in just the past week. Analysts are now anticipating phenomenal growth of 176.36% to $1.52/share in the third quarter.
It’s a similar story as far as full-year EPS estimates go, as analysts have increased projections by +13.89% in the past 30 days. The 2022 Zacks Consensus EPS Estimate now stands at $4.10/share, reflecting tremendous potential growth of 298.06% relative to last year. Sales are anticipated to climb 20.78% to $2.41 billion.
Image Source: Zacks Investment Research
Let’s Get Technical
CLW shares have advanced over 60% in the past four months alone. Only stocks that are in extremely powerful uptrends are able to make this type of price move while the market is in a correction. This is the kind of stock we want to include in our portfolio – one that is trending well and receiving positive earnings estimate revisions.
Image Source: StockCharts
Notice how both the 50-day and 200-day moving averages (blue and red lines, respectively) are sloping up and have acted as support this year throughout the bullish move. The stock had been making a series of higher highs. With both strong fundamentals and technicals, CLW is poised to continue its outperformance.
Other Factors to Consider
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. As we know, Clearwater Paper has recently witnessed positive revisions. As long as this trend remains intact (and CLW continues to deliver earnings beats), the stock will likely continue its bullish run this year. Cautious investors may feel hesitant about investing in a stock that has come this far, but the fact is this elite company is still outperforming.
CLW is relatively undervalued, irrespective of the metric used:
Image Source: Zacks Investment Research
Bottom Line
Solid institutional buying should continue to provide a tailwind for the stock price. CLW is ranked favorably by our Style Score Categories with an ‘A’ for Growth and ‘A’ for Momentum, paving the way for an overall ‘A’ VGM score. This indicates that there’s a strong likelihood that momentum will continue on the heels of strong sales and earnings growth.
Robust fundamentals combined with a strong technical trend certainly justify adding shares to the mix. Backed by a leading industry group and robust history of earnings beats, it’s not difficult to see why this company is a compelling investment. This long-term stock market winner continues to prove its doubters wrong, and investors would be wise to consider CLW as a portfolio candidate if they haven’t already done so.
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Bull of the Day: Clearwater Paper Corp. (CLW)
Clearwater Paper (CLW - Free Report) , a Zacks Rank #1 (Strong Buy), is a long-term stock market winner within the Zacks Basic Materials sector. CLW is currently breaking out to its highest price level this year, all while most stocks hover in bear market territory. The company’s longevity and continued stock price ascent speak to management’s ability to adapt to the ever-changing market landscape. The Basic Materials sector is currently displaying some favorable characteristics as shown below:
Image Source: Zacks Investment Research
CLW sports the highest Zacks Momentum and Growth Style Scores of ‘A’. The company is part of the Zacks Paper and Related Products industry group, which ranks in the top 16% out of more than 250 Zacks Ranked Industries. Also note the favorable metrics for this industry group below:
Image Source: Zacks Investment Research
Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1.
It’s no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market. By focusing on leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our stock-picking success. Let’s take a deeper look at this top-rated stock located within a leading sector and industry group combination.
Company Description
Clearwater Paper manufactures and supplies bleached paperboards and parent roll tissues globally. The company offers folding cartons, liquid packaging, cups and plates, softwood pulp products, and commercial printing items. CLW also provides at-home tissue products, including paper towels, bath tissues, and napkins.
The paper manufacturer sells its products to retailers and wholesale distributors, including grocery, club, mass merchants, and discount stores. Clearwater Paper was incorporated in 2005 and is based in Spokane, WA.
Earnings Trends and Future Estimates
CLW has built up an impressive earnings history, surpassing earnings estimates in three of the last four quarters. The company has delivered a +28.76% average earnings surprise over a trailing four-quarter period.
The CLW growth engine is expected to remain hot this year, as analysts covering the paper company have increased their Q3 earnings estimates by 31.03% in just the past week. Analysts are now anticipating phenomenal growth of 176.36% to $1.52/share in the third quarter.
It’s a similar story as far as full-year EPS estimates go, as analysts have increased projections by +13.89% in the past 30 days. The 2022 Zacks Consensus EPS Estimate now stands at $4.10/share, reflecting tremendous potential growth of 298.06% relative to last year. Sales are anticipated to climb 20.78% to $2.41 billion.
Image Source: Zacks Investment Research
Let’s Get Technical
CLW shares have advanced over 60% in the past four months alone. Only stocks that are in extremely powerful uptrends are able to make this type of price move while the market is in a correction. This is the kind of stock we want to include in our portfolio – one that is trending well and receiving positive earnings estimate revisions.
Image Source: StockCharts
Notice how both the 50-day and 200-day moving averages (blue and red lines, respectively) are sloping up and have acted as support this year throughout the bullish move. The stock had been making a series of higher highs. With both strong fundamentals and technicals, CLW is poised to continue its outperformance.
Other Factors to Consider
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. As we know, Clearwater Paper has recently witnessed positive revisions. As long as this trend remains intact (and CLW continues to deliver earnings beats), the stock will likely continue its bullish run this year. Cautious investors may feel hesitant about investing in a stock that has come this far, but the fact is this elite company is still outperforming.
CLW is relatively undervalued, irrespective of the metric used:
Image Source: Zacks Investment Research
Bottom Line
Solid institutional buying should continue to provide a tailwind for the stock price. CLW is ranked favorably by our Style Score Categories with an ‘A’ for Growth and ‘A’ for Momentum, paving the way for an overall ‘A’ VGM score. This indicates that there’s a strong likelihood that momentum will continue on the heels of strong sales and earnings growth.
Robust fundamentals combined with a strong technical trend certainly justify adding shares to the mix. Backed by a leading industry group and robust history of earnings beats, it’s not difficult to see why this company is a compelling investment. This long-term stock market winner continues to prove its doubters wrong, and investors would be wise to consider CLW as a portfolio candidate if they haven’t already done so.