Seeking Alpha: Orchids Paper Products Taking Big Swings To Become A National Player

Say what you will about Orchids Paper Products (NYSEMKT:TIS), but you can't accuse the company of lacking ambition. When I last wrote about this manufacturer of private label paper products like towels, toilet paper, and napkins, the company was a regional operator focused on serving customers (largely dollar stores and Wal-Mart (NYSE:WMT)) within 500 miles of the company's Oklahoma facility. About a year later the company is now pursuing plans that will have it operating as a national player (or at least very close to it) within a year.

There is certainly risk with Orchids' strategy, as the company will be adding meaningful debt to its balance sheet and the private label market has ample competition from the likes of Clearwater Paper (NYSE:CLW), Cascades (OTCQB:CADNF) (CAS.TO), and First Quality just to name a few. I'm also a little concerned about the potential disruption to the business over the next couple of years from this ambitious expansion plan, as well as the aggressive free cash flow efficiency assumptions baked into the price. All of that said, I don't think a $30-$31 fair value is unreasonable at this point and that would argue that this is a name worth following.

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Orchids Paper Products Taking Big Swings To Become A National Player