Rite Aid Corporation (RAD), The Home Depot, Inc. (HD), International Paper Company (IP): Market Moving Upgrades Worth Noting on Friday

At first glance, International Paper Company (NYSE:IP) looks expensive, with its trailing P/E ratio of 26.63, but this should be weighed against its forward P/E ratio of 10.19. With the stock trading at just 10.19 times next year’s earnings and just 0.76 times sales, it is priced significantly cheaper than the market. This is a company that is expected to outperform economic growth over the next five years, and is priced very conservatively, with a PEG ratio of just 0.39. Personally, I really like this stock, and the 2.60% yield it returns. I’m not sure that high containerboard prices will hold, but either way, I still think the stock is a “buy” and is cheap.

Conclusion

In my book, Taking Charge With Value Investing (McGraw-Hill, 2013), I discuss how to assess the opinions of analysts, and how to use them to your advantage. Typically, there are two types of calls:those that follow the trend and those who call regardless of the trend. It is important to distinguish between these two groups, and to not follow the performance that a call creates, but rather read and incorporate the notes as part of your research. Then, when you are able to find inconsistencies between value and valuation you will be better prepared to capitalize on the opportunity.

Brian Nichols is long RAD. The Motley Fool recommends Home Depot.