Orchids Could Bloom Again After Withering Competitive Pressure

Orchids Paper Products (TIS) has been an awful call for me over the past 18 months, as this manufacturer of primary private-label tissue products was hit hard by pricing moves from the competition and its own elevated costs and challenges tied to getting a new plant up and running. At the worst, the company saw revenue drop more than 20% year over year, leading to its first quarterly operating losses in a decade, serious liquidity pressures, and the suspension of the dividend. With all that, the shares are less than half the price they were the last time I wrote about this company.

On the positive side, the company's new Barnwell facility is up and running, the company has been successful in targeting more premium business, and the book of business over the next year would suggest record revenue and EBITDA. On the negative side, price and cost pressures remain a risk and the company must do something about its liquidity situation, as there is little room for error here.

I believe a lot of things went wrong for the company all at the same time, but I don't believe the story is broken. If the new business comes through as expected, Orchids should be back on a path toward high-single-digit/low-double-digit revenue growth and a return to operating and free cash flow margins in the mid-teens. Those, in turn, support a fair value in the mid-to-high teens, making Orchids a high-risk story that does at least offer some upside.

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Orchids Could Bloom Again After Withering Competitive Pressure

Seeking Alpha: Most Of The Action At Medical Action Will Come From Margins

When most med-tech companies trade at an EV-to-sales multiple of 2x to 4x, Medical Action Industries' (MDCI) 0.4x multiple is a pretty clear signal that something is very different about the company. In this case, we're talking about a small medical disposables company that has not only been seriously growth-challenged, but also had to absorb significant gross margin pressures. Although patient value-oriented investors may want to consider Medical Action Industries for its margin improvement potential, investors should keep in mind that the market seldom give full credit to companies with weak internal growth prospects.

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Most Of The Action At Medical Action Will Come From Margins

Investopedia: P&G Rewards Longs With Better Sales And Stronger Margins

Although I recently suggested that Wall Street has already amply rewarded Procter & Gamble (NYSE:PG) for its self-improvement potential, the company showed in its fiscal second quarter results that it may still have more on the table. While incrementally less momentum in developing economies could eventually develop into another problem to address, P&G management is simultaneously delivering on product innovation/introduction and cost cutting.

Read more here:
http://www.investopedia.com/stock-analysis/2013/PG-Rewards-Longs-With-Better-Sales-And-Stronger-Margins-PG-UL-KMB-JNJ0130.aspx

Dividend.com: Profiling 7 Companies That Have Raised Dividends For 25 Years

There is more to successful dividend investing than simply spotting high yields. Rather, the most successful dividend stock investments are those where the company’s underlying fundamentals continue to improve and where ongoing free cash flow growth can continue to support higher payouts. The following, then, are seven companies that have been uncommonly strong dividend growth stories over the past 25 years.

Please read the full article here:
http://www.dividend.com/blog/?p=52107

Investopedia: Icahn Puts Clorox In The Spin Cycle

Love him or hate him, Carl Icahn makes the world a more interesting place. Who else but Icahn would launch a multi-billion dollar bid for a company he likes while hoping that the bid ultimately fails? And yet, that is what is happening now with Clorox (NYSE:CLX), as Icahn apparently hopes to stimulate a superior bid from a larger consumer goods company. 


The Deal That May Be
Icahn (through Icahn Enterprises) has stepped up with a bid of $76.50 per share for the rest of Clorox (Icahn owns a little more than 9% of Clorox shares). That is a 12% premium to a stock that has been a pretty notable laggard versus the S&P 500 over the past two years (though an outperformer on the five year comparison).

If Clorox were to take this $10.2 billion deal, it would be at a valuation of about 10.6x trailing EBTIDA and less than two times forward sales - valuations that would still be below comparables like Procter & Gamble (NYSE:PG) and Colgate Palmolive (NYSE:CL). 



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http://stocks.investopedia.com/stock-analysis/2011/Icahn-Puts-Clorox-In-The-Spin-Cycle-CLX-PG-CL-KMB-UL-CHD-RGBPY.PK0718.aspx

Nordson's Growth Story Sticks

Like it or not, the U.S. economy really is recovering. Rail traffic continues to highlight that companies are shipping more and more "stuff" around the country. Grainger's (NYSE:GWW) monthly sales rates have stayed strong, and then there is the case of Nordson's (Nasdaq:NDSN) volume and order growth. 

Okay, maybe this last point needs a little more explanation, since Nordson is not exactly a household name. Nordson sells a wide range of products that dispense and apply all sorts of adhesives, coatings, sealants, surface treatments and so on. What is intriguing, though, is that this company sells into many different parts of the economy (consumer non-durables, durables, tools, appliances and tech), and if they are seeing broad order growth, that means a lot of industries are opening their wallets for cap-ex spending.

A Solid End To The Year
For the fiscal fourth quarter, Nordson reported that revenue rose 22% on the back of a 23% jump in product volume. That result puts the company at the lower end of a narrow analyst range. Growth was strongest in the advanced technology business, with 42% overall growth led by nearly 43% volume growth. The adhesive dispensing business (the company's largest) saw revenue rise about 8%, while the industrial coatings business produced sales growth of 38%. (For related reading, see Is Growth Always A Good Thing?)

Operating leverage was also fully in play this quarter. The company's gross margin improved by a full point, while the operating margin improved about six full points (adjusting the year-ago figure for some impairments). All in all, adjusted operating profits grew almost 59%, with every segment showing improvement.

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http://stocks.investopedia.com/stock-analysis/2010/Nordsons-Growth-Story-Sticks-NDSN-GWW-ITW-KMB-PG-MDT-DOV1220.aspx