Section 1: Company Overview and Fundamentals

1.1 Company Overview:

International Paper Company (NYSE: IP) is a producer of renewable fiber-based packaging and pulp products with manufacturing operations. The Company operates in two segments: Industrial Packaging and Global Cellulose Fibers. The Industrial Packaging segment is a manufacturer of containerboard in the United States. The Cellulose Fibers segment offers a product portfolio, including fluff, market, and specialty pulps. The Company operates over 24 pulp and packaging mills, approximately 163 converting and packaging plants, over 16 recycling plants, and over three bag facilities. Its production facilities are in Canada, Europe, North Africa, and Latin America.

Kalkine’s Diversified Opportunities Report covers the Company Overview, Key positives & negatives, Investment summary, Key investment metrics, Top 10 shareholding, Business updates and insights into company recent financial results, Key Risks & Outlook, Price performance and technical summary, Target Price, and Recommendation on the stock.

  Stock Performance:

• IP has been corrected by 19.78% in the past three months, and with a 20.72% of correction in the past six months.

• The stock is leaning towards the lower band of its 52-week range of USD 48.51 and 52-week low price of USD 29.41. The price after crossing its October 2022 lows has made a fresh 52-week low.
• The price is currently trading below both its short-term (50-day) SMA and long-term (200-day) SMA, with leading momentum indicator hovering in an oversold territory 21.76, implies a potential pullback from the current trading levels.

1.2 Summary Table

1.3 The Key Positives, Negatives, and Investment summary

1.4 Key Metrics:

The company has demonstrated a commendable track record of revenue generation over the past five years, except for the disruptive impact of the COVID-19 outbreak in 2020. Despite this setback, the company has consistently managed its costs across various operational segments, as evidenced by sustained levels of gross and net profit. This achievement highlights the company's ability to effectively control expenses and optimize operational efficiency. Additionally, the company's consistent net margins over the five-year period indicate a strong financial performance and prudent management of resources. These results suggest that the company has implemented effective strategies to navigate challenges and maintain stability in its financial performance, fostering confidence in its ability to sustain profitability in the long term.

1.5 Top 10 shareholders:

The top 10 shareholders together form ~44.45% of the total shareholding, signifying diverse shareholding. The Vanguard Group, Inc., and BlackRock Institutional Trust Company, N.A. are the biggest shareholders, holding the maximum stake in the company at ~12.11% and ~8.04%, respectively.

Section 2: Business Updates and Corporate Business Highlights

2.1 Recent Updates:

The below picture gives an overview of the recent updates:

2.2 Insights of Q1FY23:

Section 3: Key Risks

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

  Stock Performance:

• IP has been corrected by 19.78% in the past three months, and with a 20.72% of correction in the past six months.

• The stock is leaning towards the lower band of its 52-week range of USD 48.51 and 52-week low price of USD 29.41. The price after crossing its October 2022 lows has made a fresh 52-week low.
• The price is currently trading below both its short-term (50-day) SMA and long-term (200-day) SMA, with leading momentum indicator hovering in an oversold territory 21.76, implies a potential pullback from the current trading levels.

 

4.2 Fundamental Valuation

Valuation Methodology: Price/Earnings per share Multiple Based Relative Valuation

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is May 31, 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: The report publishing date is as per the Pacific Time Zone.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

 Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

 Stop-loss: It is a level to protect against further losses in case of unfavorable movement in the stock prices.