An aristocrat with 40 years of growth is at the bottom. Does it make sense to buy?
The best investment opportunities are often hidden in the most boring sectors. While market attention is focused on artificial intelligence and tech stars, there are companies that quietly manufacture the things we use every day without noticing. Yogurt packaging, beverage bottles, medicine blister packs, chip bags. It's a "boring" business, but precisely because of that it's exceptionally resilient: people eat, drink, and take medicine in good times and bad, so demand for packaging never disappears.
Key points
It pays a dividend of around 5.6% and has been increasing it for over 40 consecutive years, yet the stock trades near its multi-year lows.
Last year it swallowed a competitor for $10.4 billion and immediately doubled revenue to $23.5 billion. The balance sheet ballooned to twice its size.
The price-to-earnings ratio of 36 looks expensive, but it is distorted by merger costs. The real valuation is roughly one-third of that.
The merger brings savings of $650 million annually, which are expected to boost profit at a double-digit pace in 2027.
It manufactures packaging for food, beverages, and medicines. A boring but resilient business that people need in every economy.
The company in question is a global leader in this boring but indispensable sector and belongs to the elite group of so-called dividend aristocrats, companies that have increased dividends for decades without interruption. It offers a generous yield of around 5.6%, yet its stock trades near multi-year lows. That is an unusual combination that calls for an explanation: why has the market pushed such a generous and stable payer to the sidelines?
The answer lies in one giant event. Last year the company carried out a transformative merger, bought a major competitor for billions of dollars, and immediately doubled in size. Such a merger always brings chaos to the accounting: one-time costs, huge debt, and above all seemingly collapsed profit that scares investors who look only at the surface. But those who understand what is happening beneath the surface see a completely different company than the one shown by misleading accounting numbers.
The question for an investor is not whether this business is stable. Food and medicine packaging is textbook defensive. The question is whether the company can turn its big bet on the merger into savings and growth, as promised, whether it will maintain its famous dividend, and whether today's depressed price truly hides a deep discount, as the stock's advocates claim. The answer, along with a detailed valuation, target prices, and scenarios, is discussed in the paid section.