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Zacks

Bull of the Day: Clearwater Paper (CLW)

The Zacks – Paper and Related Products Industry is currently ranked in the top 16% of all Zacks Industries.

Studies have shown that 50% of a stock's price movement can be attributed to the group it’s in, making it crucial to ensure that investors target stocks in a thriving industry.

In fact, the top 50% of Zacks Ranked Industries outperform the bottom 50% by a factor of more than two to one.

A stock in the realm, Clearwater Paper CLW, sports the highly-coveted Zacks Rank #1 (Strong Buy) paired with an overall VGM Score of a B.

Right off the bat, that’s a stellar combination.

Clearwater Paper, a standalone company, produces pulp and paperboard at six facilities across the country.

The company manufactures quality paperboard, consumer tissue, and wood products with direct access to the public capital markets.

Let’s take a deeper dive in.

Earnings Outlook & Share Performance

Analysts have had a bullish stance over the last several months, substantially upping their bottom-line outlook across the board and pushing the stock into a Zacks Rank #1 (Strong Buy).


Image Source: Zacks Investment Research

The company is forecasted to grow at a breakneck pace; the Zacks Consensus EPS Estimate of $4.10 calls for Y/Y earnings growth of an almost unbelievable 300%.

Further, Clearwater Paper shares have been notably strong in 2022, up a solid 3% vs. the S&P 500’s 23% descent.


Image Source: Zacks Investment Research

Over the last three months, shares have continued on their market-beating trajectory, up 12% vs. the general market’s nearly 4% decline.


Image Source: Zacks Investment Research

The favorable price action of CLW shares alludes to one thing – buyers have defended the stock all year long, undoubtedly a positive in a historically-volatile 2022.

Valuation

In addition, valuation levels don’t appear stretched; the company’s 0.3X forward price-to-sales ratio is nowhere near 2018 highs of 0.5X and represents a sizable 79% discount relative to its Zacks Sector.


Image Source: Zacks Investment Research

CLW sports a Style Score of a B for Value.

Earnings Performance

Clearwater Paper has consistently exceeded quarterly estimates, beating out the Zacks Consensus EPS Estimate in seven of its last ten prints.

Top-line results have primarily come in above expectations as well, with CLW registering six revenue beats across its last ten quarters. Below is a chart illustrating the company’s revenue on a quarterly basis.


Image Source: Zacks Investment Research

Bottom Line

One of the best ways investors can find expected winners within the market is by utilizing the Zacks Rank – one of the most potent market tools out there.

A portfolio consisting of Zacks Rank #1 (Strong Buy) stocks has beaten the market in 26 of the last 31 years with an average annual return of 24%.

Additionally, the top 5% of all stocks receive the highly coveted Zacks Rank #1 (Strong Buy). These stocks should outperform the market more than any other rank.

Clearwater Paper CLW would be an excellent stock for investors to keep on their watchlists, as displayed by its Zack Rank #1 (Strong Buy).


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Clearwater Paper Corporation (CLW): Free Stock Analysis Report
 
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