Market Overview

Like Family Dollar and Dollar General? Here Are 3 Reasons You Should Love Orchids Paper

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As fans of the Seattle Seahawks and Denver Broncos know, there are always winners and losers. In the retail sector, the losers include Sears, J.C. Penney, Bon-Ton Stores and Radio Shack, among many others. The winners include Family Dollar (NYSE: FDO) and Dollar General (NYSE: DG), as deep discount stores have taken away customers from retailers in a wide range of product lines.

As Orchids Paper Products (NYSE: TIS) supplies the winners, there are three reasons to consider the stock of this small cap that is based in Oklahoma.

Orchids Paper Products has a stable customer base for its private label tissues and other products. More than 80 percent of the revenues come from Family Dollar and Dollar General. Sales growth is up for both Dollar General and Family Dollar. That provides Orchids Paper Products with a solid stream of revenue.

Related: 3 Winners From The Super Bowl, Other Than The Seahawks

Sales and earnings-per-share are rising for Orchids Paper Products, too. These bullish trends are the second reason.

On a quarterly basis, sales growth is up by 15.50 percent. Over the past five years, sales growth was only 6.20 percent. Earnings-per-share growth this year is just about double that for the past five years.

The third is that Orchids Paper Products is very generous in sharing the proceeds of the higher sales and earnings with those who own the stock.

At present, the average dividend for a member of the S&P's 500 Index is under two percent. The dividend yield for Orchids Paper Products is 4.36 percent. The company has the earnings to support the generous dividend, too.

These three reasons combine to offer what should be a solid total return for the shareholders of Orchids Paper Products.

Posted-In: dollar general Family Dollar StoresLong Ideas Dividends Small Cap Analysis Technicals Economics Trading Ideas Best of Benzinga

 

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