Shares of International Paper Company (IP) hit a 52-week high of $53.14 on Nov 4, 2014. The stock closed the session at $52.60, which reflects a decent year-to-date return of 11.7%.
Despite its strong price appreciation, this Zacks Rank #4 (Sell) stock still has enough fundamentals that may further drive it upward. Investors remain upbeat as the company remains focused on its reinvestment strategy and expect a surge in packaging orders for both traditional and online retailers.
Growth Drivers
On Nov 3, 2014, International Paper reported operating earnings (excluding one-time items) of $409 million or 95 cents per share for the third quarter of 2014. The earnings comfortably beat the Zacks Consensus Estimate of 88 cents. Net sales for the second quarter were $6,051 million versus $5,975 million in the year-ago quarter and came above the Zacks Consensus Estimate of $5,968 million.
International Paper continues with its opportunities for reinvestment, which include the recently announced restart project of its number three paper machine at Valliant for its containerboard business, the expansion of its Canton, OH, foodservice facility and the coated paperboard enhancement project. The company is well positioned financially and remains focused on the execution of its plans and continuous progress toward its key goals
Over the years, International Paper has consistently returned significant cash to its shareholders through dividends and share repurchases. The company’s investment strategy takes a holistic view of the rapidly evolving market and deploys a dynamic capital allocation approach. The free cash flow generation continues to be strong for the company.
International Paper announced a 14% dividend increase from $1.40 to $1.60 per share. This is the third consecutive double-digit dividend hike for International Paper in three years. The company will continue to buyback shares and has purchased more than 1.4 billion worth of shares to date.
Other Stocks to Consider
Other stocks that look promising and are worth a look include Mercer International Inc. (MERC), MeadWestvaco Corp. (MWV) carrying a Zacks Rank #1 (Strong Buy) and Fibria Celulose SA (FBR) carrying a Zacks Rank #2 (Buy).
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