Greif Inc.: Packing up the profits

Guest blogger: Larry Schutts, vice president of Stockwinners.com and a contributing editor for Theflyonthewall.com. Larry looks for stocks with technical and fundamental characteristics indicating gains in the next 30 days. However, price movements may be volatile. He includes a stop-loss price in each post. Consider selling a position should the stop-loss be violated. Look for more of Larry's stock picks in the days and weeks to come.

In conveying goods from producer to consumer, protection of the product is always a primary concern. A leading manufacturer of containers used on the bulk shipping side of the equation is headquartered in Columbus, Ohio.

Greif Inc. (NYSE:GEF) produces containers and containerboard, mainly for bulk shippers in the chemical, food, petroleum, mineral, machinery and pharmaceutical industries. Products include drums, water bottles, pallets, corrugated containers and multiwall packaging. The firm also manages some 300,000 acres of North American timberland. The company maintains over 160 operating locations, in nearly fifty countries.

Greif pleased investors earlier in the month, when it reported Q4 EPS of $1.05. That was eight cents above the average Street estimate. Revenues rose 19.9% (y/y) to $882.3 million. Management also guided FY08 EPS to $3.80-4.00, versus consensus of $3.83. Deutsche Securities subsequently reiterated its "buy" rating on the shares and boosted its price target to $85.

The stock popped through moving average resistance on the news and then passed into a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Brokers recommend the issue with two "strong buys," three "buys" and one "hold." Analysts see a 20% growth rate through the next year. The GEF P/E ratio (19.01), PEG ratio (1.27), Price to Sales ratio (0.88), Price to Book ratio (2.94) and Sales Growth rate (19.94%), compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 48% of the outstanding shares. Over the past 52 weeks, the stock has traded between $47.81 and $68.30. A stop-loss of $56.25 looks good here.

hilaryonstocks at 3:46:00 PM EST Blog about this entry

This entry has 2 comments: (Add your own)

#2 Comment from pnsczech
3/24/08 9:20 PM | Permalink

Greif buys their competition,takes their customers,fires all the employees and closes their plants. That is how they expand their customer base. Why they are not considered a monopoly is beyond me. They bought out Sunoco,Michaels Cooperage and General Cooperage. Again they fired the employees,this is smoke and mirror buisness. They have been shutting down plants all over America. They don't need to make a quality product and deliver it on time,of which they have a terrible record, they are the only game in town. This will all come to an end soon ,there are not many more competitors to buy out. This means the growth will stop as companies look to other ways to package their product. Greif has done nothing to open new plants in the U.S. Their growth can only and only be in third world countries. They have shut down plants,reduced workforces and played the smoke and mirror buisness game very well. When their plants and products don't make a profit, they just sell some of their substantial timber holdings to make it look like Greif is a profitable company.Who will they buy next and shut their plants down? They look out for the stockholders and not the expendable employees.
#1 Comment from ayubmusa
12/19/07 3:50 PM | Permalink

OK I Take it back. Please Hilary dont leave us and come back !! Larry Schutts , talks out of his backside and I delete his blogs ( tips) on sight.

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Greif Inc.: Packing up the profits