Schweitzer-Mauduit International, Inc. (SWM)

wax (96.07) Submitted: 9/05/07 6:54 AM : Start Price: $21.63 SWM Score: 14.17

After adding this stock, I'm assured of going to hell in a handbasket.

The company, like Alliance One International (AOI) is in the tobacco business, but unlike AOI, Schweitzer-Mauduit International, Inc. makes the paper that is used to make the cigarette, which is 90% of the company's business.

The remaining 10% is reconstituted tobacco leaf used for cigarette fillers and fine stationary manufacturer.

I believe a reasonable value for the stock is in the $60-$65 range and have set my entry target at $32, a first sell target at $61, and a close target at $66.

The stock closed yesterday at $22.45 with first resistance at $26.52, second resistance at $26.55, and support at $18.03.

I realize that I'm taking a bit of a risk here, adding the stock at this time since the upside reward and the downside risk from a trading perspective are about the same at 18%.

But as any value investor will tell you, while it may hurt buying stocks as they fall, the pain subsides pretty quick when you're selling a stock that has reached it's estimated reasonable value.

At any rate, I'm going to start adding this one to my real world portfolio over time, and it will more than likely end up a 2% position.

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