Like most major markets, the TSX has been a middling affair this year, and has been under heavy pressure in recent months. So a stock chart like the one possessed by Quebec-based Intertape Polymer (TSX:ITP) is doubly impressive.
Shares of Intertape have risen throughout 2012, beginning the year at $3.31 and closing yesterday at $7.12.
Benj Gallander, who bought Intertape at $2.66, thinks the company can double from its current level. The stock, which is in approximately the same range it was when the co-editor of the Contra the Heard investment letter appeared on BNN’s Market Call May 31st with host Mark Bunting, says Intertape has effectively moved from a contrarian value play to a momentum play. The momentum can continue, says Gallander, because the company is exposed to areas of recovery, such as the housing and aeronautical markets.
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Intertape, which has been around since the early 1980′s, grew rapidly through acquisition in the 1990′s. The company now does nearly $800-million in annual revenues, selling specialty tapes, stretch wrap, shrink films and engineered coated fabrics. Intertape’s stock chart looked like a ski hill for much of the past decade, as it was posting some hefty losses competing with giants like 3M in an inherently low-margin business. But shares of the company have risen on improved financials.
In May, Intertape reported its Q1, 2012 results. Though the company’s revenue was up slightly, the real story was its improved margins. In the quarter, gross margin increased to 16.5% from 12.4% last year. CEO Greg Yull said these initiatives were part of an emphasis on selling higher margins products while reducing operating costs. This continued a larger trend for Intertape, 2011’s adjusted EBITDA of $63.1-million represented an increase of 50.7%
At press time, shares of Intertape Polymer were up 2% to $7.26.