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Buy This Under-the-Radar Stock Now and Hold for Years?
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Packaging Corporation of America (PKG - Free Report) is a paper powerhouse that crushed our fourth quarter earnings estimates at the end of January and posted a strong 2021. PKG’s containerboard and other offerings are as crucial as ever and the stock appears to be worth considering as a long-term buy and hold name in a well-diversified portfolio.
Simple Business, Long-Term Potential
Packaging Corporation of America is one of the largest paper products producers in the U.S., with a portfolio that includes containerboard, uncoated freesheet, and an array of various packaging solutions. The company has grown rather steadily for years and the rise of e-commerce and the broader consumer spending boom will play a crucial role in its growth going forward.
Packaging Corporation of America, or PCA as it refers to itself, boasts that its products help package “everything from auto parts to watermelons to the kitchen sink.” The company, like many firms in paper and beyond, is focused on sustainable solutions, which includes its ability to create the ideal product-to-package ratio.
PCA’s adjusted FY21 earnings surged 62% on higher 17% revenue that saw it pull in $7.7 billion. Looking ahead, Zacks estimates call for Packaging Corp’s adjusted FY22 earnings to climb another 12% on 8% stronger revenue. Plus, the company has topped our EPS estimates by an average of 23% in the last four periods, including a 33% beat at the end of January.
Image Source: Zacks Investment Research
Some Other Fundamentals
Packaging Corporation of America’s FY22 consensus earnings estimate is up 12% since its fourth quarter release, with its 2023 figure 22% higher. This bottom-line positivity helps PKG land a Zacks Rank #1 (Strong Buy) right now. The paper packaging firm is also part of an industry that ranks in the top 20% of over 250 Zacks industries at the moment.
PKG shares have surged 400% in the past 10 years compared to the S&P 500’s 240% and its industry’s 90%. More recently, Packaging Corporation of America stock is up 60% in the last two years vs. its highly-ranked industry’s 40% and the S&P 500’s 44%.
PKG stock has popped 11% in the last 12 months and trades around 5% below its records at around $149 per share on Thursday. Despite its market and industry-topping climb, Packaging Corporation of America trades at a 35% discount to its own two-year highs at 13.9X forward 12-month earnings and near its peers. This also marks a discount to its 10-year median and solid value vs. the broader Industrial Products sector.
Image Source: Zacks Investment Research
Bottom Line
Packaging Corporation of America is far from a flashy stock or a household name. This doesn’t matter because it operates behind the scenes within an industry that will remain vital to the U.S. and global economies for decades. Plus, PKG’s 2.7% dividend yield matches its industry and blows away the S&P 500’s 1.3% and the 10-year U.S. Treasury’s 1.8%.
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Buy This Under-the-Radar Stock Now and Hold for Years?
Packaging Corporation of America (PKG - Free Report) is a paper powerhouse that crushed our fourth quarter earnings estimates at the end of January and posted a strong 2021. PKG’s containerboard and other offerings are as crucial as ever and the stock appears to be worth considering as a long-term buy and hold name in a well-diversified portfolio.
Simple Business, Long-Term Potential
Packaging Corporation of America is one of the largest paper products producers in the U.S., with a portfolio that includes containerboard, uncoated freesheet, and an array of various packaging solutions. The company has grown rather steadily for years and the rise of e-commerce and the broader consumer spending boom will play a crucial role in its growth going forward.
Packaging Corporation of America, or PCA as it refers to itself, boasts that its products help package “everything from auto parts to watermelons to the kitchen sink.” The company, like many firms in paper and beyond, is focused on sustainable solutions, which includes its ability to create the ideal product-to-package ratio.
PCA’s adjusted FY21 earnings surged 62% on higher 17% revenue that saw it pull in $7.7 billion. Looking ahead, Zacks estimates call for Packaging Corp’s adjusted FY22 earnings to climb another 12% on 8% stronger revenue. Plus, the company has topped our EPS estimates by an average of 23% in the last four periods, including a 33% beat at the end of January.
Image Source: Zacks Investment Research
Some Other Fundamentals
Packaging Corporation of America’s FY22 consensus earnings estimate is up 12% since its fourth quarter release, with its 2023 figure 22% higher. This bottom-line positivity helps PKG land a Zacks Rank #1 (Strong Buy) right now. The paper packaging firm is also part of an industry that ranks in the top 20% of over 250 Zacks industries at the moment.
PKG shares have surged 400% in the past 10 years compared to the S&P 500’s 240% and its industry’s 90%. More recently, Packaging Corporation of America stock is up 60% in the last two years vs. its highly-ranked industry’s 40% and the S&P 500’s 44%.
PKG stock has popped 11% in the last 12 months and trades around 5% below its records at around $149 per share on Thursday. Despite its market and industry-topping climb, Packaging Corporation of America trades at a 35% discount to its own two-year highs at 13.9X forward 12-month earnings and near its peers. This also marks a discount to its 10-year median and solid value vs. the broader Industrial Products sector.
Image Source: Zacks Investment Research
Bottom Line
Packaging Corporation of America is far from a flashy stock or a household name. This doesn’t matter because it operates behind the scenes within an industry that will remain vital to the U.S. and global economies for decades. Plus, PKG’s 2.7% dividend yield matches its industry and blows away the S&P 500’s 1.3% and the 10-year U.S. Treasury’s 1.8%.