BUSINESS DOESN'T GET MUCH more mundane than boxes, bottles and bubble-wrap. Yet packaging stocks have reversed a bout of underperformance. BCA Research notes they tend to do well in "reflationary" climates, with a steeper bond-yield curve. Food exports are a boon, and pricing power has been strong.
Sonoco (SON) is a century-old, $3 billion market-value company that has managed to extract good returns from wrappers and tubes. They make containers for Oreos, Febreeze and countless industrial products. Almost 4
0% of revenue is from abroad. The stock trades at 12-times projected 2008 earnings. Management is focused on cash-flow metrics and sensible acquisitions. The dividend yield is 3.5%. The stock was punished hard beginning last summer from its highs in the mid-40s, as profit guidance was cut, and is now near 29.As the guidance cuts showed, this is not a business immune to cyclical headwinds. But for the stock to work, it merely has to be less cyclical than the market now fears.
Founded in 1899, Sonoco is a $4.0 billion global manufacturer of consumer and industrial packing products and provider of packaging services, with approximately 335 operations in 35 countries, serving customers in 85 nations. (Tim)
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