In this piece, we will take a look at the 12 best packaging stocks to buy according to hedge funds. If you want to skip our overview of the packaging industry and some hot packaging stocks, then you can take a look at the 5 Best Packaging Stocks to Buy According to Hedge Funds.
Packaging stocks are some of the most interesting ones that you’re likely to find on the stock market. This is because while they are officially classified as consumer cyclical stocks their business models might not fall exactly in line with this moniker. As a recap, broadly speaking, stocks can be classified either as consumer discretionary or consumer cyclical. Consumer defensive stocks are those that are resilient to economic downturns, such as the shares of one of the biggest retailers in the world, Walmart Inc. (NYSE:WMT). On the flip side, consumer cyclical stocks are those that mirror economic performance, with one example of these firms being NIKE, Inc. (NYSE:NKE).
Packaging stocks are classified as cyclical stocks since as a whole, the assumption is that if the economy is slowing, then fewer products will sell, and naturally, fewer packages will also make their way into consumers’ hands. However, the simple fact that even if the economy is slowing, some products such as pharmaceuticals and toiletries will nevertheless be sold also means that packaging stocks also have a sizeable and stable demand during an economic slowdown that stretches consumer budgets.
Building on this, the U.S. economy has been one of the best performing in the world in 2023 and it also appears to be ready to extend this performance in 2024. The GDP grew at 2.5% in 2023, and with the first quarter of 2024 behind us, fresh data for the labor market is injecting even more hope. This data comes in the form of the latest data for non farm payrolls in America, and it shows that the economy added a whopping 303,000 jobs in March, which simply blew estimates of 200,000 jobs out of the park. Safe to say, consumer cyclical are in no mood to cause investors any concern, so now let’s look at which packaging stocks have done well during the first quarter of 2024.
Some of the best performing packaging stocks this year have been Eightco Holdings Inc. (NASDAQ:OCTO), Ranpak Holdings Corp. (NYSE:PACK), and WestRock Company (NYSE:WRK). The three stocks are up by 65.60%, 41.99%, and 16.8% year to date. Among the three, Ranpack’s shares were simply injected with steroids in March 2024 when they jumped nearly 71% between March 11 and March 19. So, what made this particular packaging stock literally reach for the stars? Well, Ranpack’s fourth quarter revenue grew by 14% annually, as it benefited from a higher orders for its machines and ended up surpassing analyst estimates.
For those out of the loop, Ranpack is a small American company that provides automated paper based packaging machines to eCommerce machines. During the highly consequential quarter’s earnings call, management cited optimism about a healthy operating environment and shared:
We finished 2023 on a positive note as we built on the momentum from the third quarter and delivered our best quarter of the year. We saw continued general improvements in the operating environment in Europe and the more pronounced holiday season in North America, compared to prior year. Overall, the e-commerce discretionary goods market and manufacturing sectors remain subdued, but we are starting to see general improvement across many of our end users and are encouraged by the seasonal uptick more in line with historical patterns in the fourth quarter. Consolidated net revenue on a constant currency basis increased 10%, driven by volume growth in our different regions as we saw improved order activity among larger e-commerce customers in the U.S. and generally improving conditions in Europe.
The volume improvements seen in Q3 and Q4 helped drive 2023 full-year net revenue, up 1% on a constant currency basis, a welcome recovery from a slower start of the year. Europe and APAC finished on a strong note, up 12% on a constant currency basis, driven by 15% volume growth as ordering patterns continued to normalize and general sentiment in the region was stable. The improvement was broad-based as all PPS categories in the region were up year-over-year. De-stocking activity is behind us and in many cases distributors and then customers are working to keep as little inventory on hand as possible. Our North America business also experienced an uptick to finish the year, with sales up 8% driven by improved volumes and contribution from automation sales.
So, looks like as the U.S. economy continues to tick, packaging stocks are also reaping the benefits. Therefore, we thought to take a look at some top packaging stocks that hedge funds are buying. A couple of notable picks are Crown Holdings, Inc. (NYSE:CCK), WestRock Company (NYSE:WRK), and Berry Global Group, Inc. (NYSE:BERY).
A workers on the production floor moving boxes of groceries in the warehouse.
Our Methodology
For our list of the best packaging stocks, we ranked all publicly traded packaging stocks on U.S. exchanges by the number of hedge funds that had bought the shares during Q4 2023 and selected those with the highest number of hedge fund investors.
For these top packaging stocks, we used hedge fund sentiment. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
Best Packaging Stocks to Buy According to Hedge Funds
12. Avery Dennison Corporation (NYSE:AVY)
Number of Q4 2023 Hedge Fund Shareholders: 23
Avery Dennison Corporation (NYSE:AVY) is a large packaging company headquartered in Mentor, Ohio. It makes and sells foils, films, tapes, and other associated packaging products. The firm has been quite busy in 2024, as it has announced new tapes for appliance manufacturing and a decision to shift to some recyclable polyethylene products.
During Q4 2023, 23 out of the 933 hedge funds part of Insider Monkey’s database had bought Avery Dennison Corporation (NYSE:AVY)’s shares. Ian Simm’s Impax Asset Management was the biggest investor due to its $36.4 million stake.
Just like WestRock Company (NYSE:WRK), Crown Holdings, Inc. (NYSE:CCK), and Berry Global Group, Inc. (NYSE:BERY), Avery Dennison Corporation (NYSE:AVY) is a top packaging stock that hedge funds are buying.
11. Sonoco Products Company (NYSE:SON)
Number of Q4 2023 Hedge Fund Shareholders: 26
Sonoco Products Company (NYSE:SON) is headquartered in Hartsville, South Carolina. It sells cones, containers, and other packaging products. Currently battling inflation in Europe, the firm ended March 2024 by announcing a price hike for some of its recycled paperboard products.
By the end of December 2023, 26 out of the 933 hedge funds tracked by Insider Monkey were the firm’s investors. The largest Sonoco Products Company (NYSE:SON) hedge fund shareholder is Ian Simm’s Impax Asset Management as it owns $47 million worth of shares.
10. Ardagh Metal Packaging S.A. (NYSE:AMBP)
Number of Q4 2023 Hedge Fund Shareholders: 27
Ardagh Metal Packaging S.A. (NYSE:AMBP) is a European packaging company headquartered in Luxembourg City, Luxembourg. It has been struggling on the financial front as of late, by having beaten analyst EPS estimates in only one of its four latest quarters.
For their fourth quarter of 2023 shareholdings, 27 out of the 933 hedge funds profiled by Insider Monkey had invested in Ardagh Metal Packaging S.A. (NYSE:AMBP). Joshua Friedman and Mitchell Julis’s Canyon Capital Advisors was the biggest investor through its $38.9 million stake.
9. Packaging Corporation of America (NYSE:PKG)
Number of Q4 2023 Hedge Fund Shareholders: 27
Packaging Corporation of America (NYSE:PKG) makes and sells shipping containers, papers, and other packaging products. Its shares are rated Buy on average, but the average share price target of $178 is significantly lower than the current market share price.
After digging through 933 hedge fund portfolios for their December quarter of 2023 shareholdings, Insider Monkey found that 27 were the firm’s shareholders. Packaging Corporation of America (NYSE:PKG)’s largest stakeholder among these is Dmitry Balyasny’s Balyasny Asset Management as it owns $71 million worth of shares.
8. Ball Corporation (NYSE:BALL)
Number of Q4 2023 Hedge Fund Shareholders: 28
Ball Corporation (NYSE:BALL) is one of the primary suppliers of metal cans to the beverage industry. Its investors were dealt with a mixed set of news in April 2024 when Barclays downgraded the stock to Equalweight from Overweight, but ended up increasing the share price target to $71 from an earlier $66.
Insider Monkey dug through 933 hedge funds for their fourth quarter of 2023 shareholdings and found that 28 had bought Ball Corporation (NYSE:BALL)’s shares. Ian Simm’s Impax Asset Management owned the biggest stake which was worth $54.4 million.
7. Graphic Packaging Holding Company (NYSE:GPK)
Number of Q4 2023 Hedge Fund Shareholders: 28
Graphic Packaging Holding Company (NYSE:GPK) is a consumer packaging products provider that caters to the needs of the food, beverage, and other industries. The firm was out with an important announcement in March 2024, when it announced that it would sell a paperboard manufacturing facility for a $700 million price tag.
During last year’s fourth quarter, 28 out of the 933 hedge funds covered by Insider Monkey’s research were the firm’s investors. Graphic Packaging Holding Company (NYSE:GPK)’s largest hedge fund investor is Ricky Sandler’s Eminence Capital due to its $196 million investment.
6. O-I Glass, Inc. (NYSE:OI)
Number of Q4 2023 Hedge Fund Shareholders: 29
O-I Glass, Inc. (NYSE:OI), as the name suggests, is a glass container manufacturer. It is headquartered in Perrysburg, Ohio and April 2024 is an important month for the firm as it has appointed a new CEO with decades of experience in the industry.
29 out of the 933 hedge funds part of Insider Monkey’s Q4 2023 database had invested in O-I Glass, Inc. (NYSE:OI). Jonathan Barrett and Paul Segal’s Luminus Management owned the biggest stake which was worth $31.5 million.
Crown Holdings, Inc. (NYSE:CCK), O-I Glass, Inc. (NYSE:OI), WestRock Company (NYSE:WRK), and Berry Global Group, Inc. (NYSE:BERY) are some top hedge fund packaging stock picks.
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Disclosure. None. 12 Best Packaging Stocks to Buy According to Hedge Funds was initially published on Insider Monkey.