Orchids Paper Products Company (TIS): Follow Peter Lynch’s Advice With This Soaring Stock

Orchids Paper Products Company (NYSEMKT:TIS) boasts a market cap of just over $216 million, annual revenue of nearly $101 million and gross profit of $22.6 million. Shares of TIS have risen 55% over the past 52 weeks, which compares with the S&P 500’s gain of just less than 16%. Orchids Paper Products Company (NYSEMKT:TIS)’s other appealing metrics include the more than 28% of outstanding shares held by insiders, and the forward annual dividend yield isn’t shabby at 5%.

The company reported record net sales of $29 million in the second quarter, and earnings before interest, taxes, depreciation and amortization (EBITDA) climbed 27% to over $6 million. Guidance was solid, with CEO Robert Snyder estimating that converted product shipments in the second half of 2013 would be at an annualized run rate of between 8.6 million and 9.1 million cases.

What really attracted me to this company is the technical picture. Shares have been in a solid uptrend since April 15. The stock has recently hit resistance in the $28 area and is building a base.

Risks to Consider: This company certainly fits the “buy what you know” axiom. However, like all other stock investments, it is not without risk. Always be certain to diversify and use stop-losses when investing.

Action to Take –> I love this stock on a breakout close above $28. My nine-month target price is $33, and the initial stop level should be just below $26.