Packaging manufacturers a strong defensive stock, says report

Packaging manufacturers such as Owens-Illinois Inc., Crown Holdings Inc, Silgan Holdings and Ball Corp are enjoying attractive valuations given their defensive qualities and potential for double-digit…

Packaging manufacturers such as Owens-Illinois Inc., Crown Holdings Inc, Silgan Holdings and Ball Corp are enjoying attractive valuations given their defensive qualities and potential for double-digit gains in earnings in 2009 barring a much deeper recession, Barron“s said on 7 December 2008. Packaging companies feature stable revenue growth, generate large amounts of cash, have pricing power and are benefiting from the fall in raw material prices that resulted from the decline in oil prices, according to Barron“s. The industry is selling for just 11 times the past 12 months“ earnings, lower than consumer-staples stocks, Barron“s said in its 8 December 2008 edition. “It“s amazing how investors will hide in consumer products but forget that the suppliers to that sector are just as defensive”, Wachovia packaging analyst Ghansham Panjabi was quoted as saying in Barron“s. Ball, Crown, Silgan and Owens-Illinois make rigid packaging such as cans, jars and bottles and are especially well-positioned right now because of their exposure to the food and beverage markets. Their shares also are relatively inexpensive, trading at an average of eight times the expected earnings for 2008, Barron“s said.