The rapid expansion of e-commerce has significantly boosted the demand for specialized packaging solutions. As online shopping becomes the preferred retail mode, companies focus on innovative, durable, and sustainable packaging to enhance customer experience and reduce environmental impact.
Given the industry’s tailwinds, it could be wise to look into fundamentally sound specialized packaging stocks Crown Holdings, Inc. , Packaging Corporation of America , and AptarGroup, Inc. for substantial returns.
The sector is increasingly emphasizing protective and functional packaging. With fragile and perishable goods being shipped globally, companies are investing in advanced materials and smart packaging technologies that ensure product safety while minimizing costs. Also, active and intelligent packaging innovations are one of the functional packaging applications that enhance product performance.
Furthermore, businesses are leveraging unique packaging designs to strengthen brand identity and improve customer engagement, creating new revenue streams for packaging firms. Eco-friendly materials and innovative, eye-catching packaging design create brand loyalty as well as a positive brand image.
As per research, 72% of consumers base their buying choices on packaging alone. Thus, the demand for innovative and visually appealing solutions continues to rise, driving further growth in the sector.
With companies shifting to sustainable packaging and turning away from traditional plastics is another driving force behind specialized packaging growth. Consumers and regulatory bodies are pushing for eco-friendly alternatives, leading to the adoption of biodegradable and recyclable materials. The global sustainable packaging market size is forecasted to nearly double, reaching $490.73 billion by 2032, growing at a CAGR of 6.6%.
Moreover, the specialty packaging market is anticipated to reach $8.72 billion by 2030, exhibiting a CAGR of 7%.
Considering these factors, let's evaluate the Industrial - Packaging stocks in detail, starting with the third choice:
Stock #3: Crown Holdings, Inc. (CCK)
CCK operates globally in the packaging industry through four segments: Americas Beverage; European Beverage; Asia Pacific; and Transit Packaging. The company produces and sells recyclable aluminum beverage cans and ends, aerosol cans, glass bottles, steel crowns, and closures.
On November 27, the company paid a quarterly dividend of $0.25 per share. CCK pays an annual dividend of $1, which translates to a yield of 1.14% at the current share price. Its four-year average dividend yield is 0.89%. Also, the company’s dividend payouts have increased at a CAGR of 7.7% over the past three years.
In terms of the trailing-12-month EBIT margin, CCK’s 11.76% is 11.3% higher than the 10.56% industry average. Similarly, its 10.12% trailing-12-month levered FCF margin is 95.3% higher than the industry average of 5.18%. Also, its trailing-12-month ROTC of 8.27% compares to the industry average of 4.97%.
CCK’s total net sales for the fiscal third quarter that ended September 30, 2024, increased marginally year-over-year, amounting to $3.04 billion, while its adjusted EBITDA stood at $1.44 billion, up 1.8% over the prior-year period. The company’s adjusted net income and earnings per share increased by 15% year-over-year to $238 million and $1.99, respectively.
Street expects CCK’s revenue for the fourth quarter (ended December 2024) to increase marginally year-over-year to $2.89 billion. Its EPS for the third quarter is expected to grow by 21.8% from the previous year, settling at $1.51. In addition, it surpassed the EPS estimates in three of the trailing four quarters, which is promising.
Over the past nine months, the stock has surged 8.9%, closing the last trading session at $87.84.
CCK’s stance is apparent in its POWR Ratings. The stock has an A grade for Growth and a B for Momentum. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
Among the 17 stocks in the B-rated Industrial - Packaging industry, it is ranked #7. Click here to see the additional CCK ratings (Value, Stability, Sentiment, and Quality).
Stock #2: Packaging Corporation of America (PKG)
PKG manufactures and sells containerboard and corrugated packaging products in the United States. The company operates through three segments: Packaging; Paper; and Corporate and Other.
On January 15, demonstrating its commitment to returning value to shareholders, the company paid a quarterly dividend of $1.25 per common share. PKG pays an annual dividend of $5, which translates to a yield of 2.32% at the current share price. Its four-year average dividend yield is 2.94%. Moreover, its dividend payouts have increased at a CAGR of 9.6% over the past five years.
The stock’s trailing-12-month net income margin of 9.46% is 96.9% higher than the industry average of 4.80%. Similarly, its 18.84% trailing-12-month ROCE is 225.5% above the industry average of 5.79%. Also, its trailing-12-month asset turnover ratio of 0.97x compares favorably to the industry average of 0.66x.
For the fourth quarter of 2024, which ended on December 31, PKG's net sales increased 10.7% year-over-year to $2.15 billion. It posted an income from operations of $302.2 million, indicating a 15.6% increase from the prior-year quarter.
The company’s net income and EPS for the quarter stood at $221.1 million and $2.45, up 16.9% and 16.7% year-over-year, respectively. Also, EBITDA grew 11.7% from the year-ago value to $438.2 million.
The consensus revenue estimate of $2.17 billion for the fiscal first quarter (ending March 2025) represents a 9.4% increase year-over-year. The consensus EPS estimate of $2.41 for the same quarter indicates a 40% improvement year-over-year. The company has an impressive surprise history; it surpassed the consensus revenue estimates in each of the trailing four quarters.
PKG shares have surged 27.1% over the past year and 8.7% over the past six months to close the last trading session at $215.12.
PKG’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
It has a B grade for Momentum, Stability, Sentiment, and Quality. Within the same B-rated industry, PKG is ranked #5 out of 17 stocks. Click here to see the additional ratings for PKG (Growth and Value).
Stock #1: AptarGroup, Inc. (ATR)
ATR designs and manufactures a range of drug delivery, consumer product dispensing, and active material science solutions and services for the pharmaceutical, beauty, personal care, home care, and food and beverage markets. It operates through three segments: Aptar Pharma; Aptar Beauty; and Aptar Closures.
On October 22, ATR secured an award of a five-year contract from the U.S. Federal Government to advance the development of its ActivShield™ technology. This innovative solution is a versatile choice for numerous environments, including rural areas, military settings, and healthcare facilities with limited or no current sterilization capability.
ATR's trailing-12-month ROCE and ROTA of 14.18% and 7.26% are 144.9% and 201.4% higher than their respective industry averages of 5.79% and 2.41%. Likewise, its trailing-12-month net income margin of 9.40% is 95.8% above the industry average of 4.80%.
During the third quarter that ended September 30, 2024, ATR’s net sales increased marginally year-over-year to $909.29 million. Its operating income was $138.29 million, up 15.9% year-over-year. The company’s adjusted net income attributable rose 7.3% and 6.4% from the prior year’s quarter to $100.73 million and $1.49 per share, respectively.
In addition, the company’s free cash flow came in at $162.71 million, an increase of 72.5% from the previous year’s period. ATR’s adjusted EBITDA amounted to $208.38 million, reflecting a growth of 7.8% from the year-ago value.
Analysts expect ATR’s revenue and EPS for the first quarter (ended December 2024) to increase marginally and 3.9% year-over-year to $852.26 million and $1.26, respectively. Furthermore, the company has surpassed the consensus EPS estimates in each of the trailing four quarters.
The stock has gained 19.4% over the past year and 7.9% over the past nine months to close the last trading session at $157.11.
It’s no surprise that ATR has an overall rating of B, equating to a Buy in our POWR Ratings system. It also has a B grade for Growth, Momentum, Stability, and Quality. It is ranked #4 in the Industrial - Packaging industry.
Beyond what is stated above, we’ve also rated ATR for Value and Sentiment. Get all ATR ratings here.
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PKG shares were trading at $215.92 per share on Thursday afternoon, up $0.80 (+0.37%). Year-to-date, PKG has declined -4.09%, versus a 3.16% rise in the benchmark S&P 500 index during the same period.
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