We don't often give much thought to commercial packaging products, but they are among the important factors allowing maintenance of our well-supplied life styles. One of the world's largest providers of such products is headquartered in Hartsville, South Carolina.
Sonoco Products Company (NYSE: SON) provides industrial and consumer packaging products and services. The industrial packaging division makes paper cores, cones and tubes used by customers in the textile, paper, film, and construction industries. The consumer packaging unit manufactures a variety of paper and plastic containers for food, chemicals, and personal care items. The packaging services unit provides supply chain management, artwork and displays. The firm conducts more than three hundred operations in thirty-five countries. Customers include General Mills (NYSE: GIS), Wal-Mart Stores (NYSE: WMT) and William Wrigley Jr. Co. (NYSE: WWY).
Sonoco pleased investors last week, when it offered solid guidance for current and upcoming periods. Management sees Q4 EPS at the high end of the range 52-55 cents, versus Street consensus of 54 cents. It also expects Y07 EPS at the high end of $2.28-2.31 ($2.29 consensus), Y07 revenues of around $4 billion ($4.04B consensus) and Y08 EPS of $2.44-2.47 ($2.37 consensus).
The SON price popped on the news and has since been defining a bullish "flag" consolidation pattern. Stocks frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the issue with two "strong buys," two "buys" and two "holds." Analysts look for a 15% average annual growth rate, through the next five years. The SON PEG ratio (1.13), Price to Sales ratio (0.83), Price to Book ratio (2.46), Price to Cash Flow ratio (9.03) and Price to Free Cash Flow ratio (22.60) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 61% of the outstanding shares. The stock is one of those used to calculate the S&P 400 MidCap Index. Over the past 52 weeks, it has traded between $28.45 and $44.91. A stop-loss of $28.50 looks good here. Note that the firm is expected to report Q4 results in early February.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.
Closing Bell: Economic Catapult for Thanksgiving & Black Friday (WMT, TGT, GRMN, GOOG, MSFT)
Deere up on Q4 earnings performance
Reid Hoffman: LinkedIn will go public (at some point)
