In these uncertain times, Sonoco Products (NYSE:SON), a global diversified packaging provider, remains a viable investment.
It's not because the company is focused on sustainability on the 50th anniversary of the first Earth Day. But, it is.
It's not because the company managed to deliver year-over-year earnings growth in the first quarter of 2020. But, it did.
It's not because the Dividend Champion, a company that has increased its dividend annually for at least 25 years, did not cut or suspend its dividend and judiciously opted to wait to raise its dividend when it declared its April payment. But, it did.
It's not because the company just sold $600 million of senior unsecured notes, giving it a liquidity position of cash and available credit exceeding $1.2 billion. Yet, it did.
It's not even because the company stepped up to help fight the COVID-19 pandemic by producing 2 million face shields as well as donating safety glasses and protective gear. And, yet, it did.
Rather, the investment thesis is based on the viability of the company's business post-pandemic, regardless of the possibility the world may operate in a new normal.
Sonoco's Viability
Sonoco reports in four segments - Consumer Packaging, Display & Packaging, Paper & Industrial Converted Products, and Protective Solutions. In fiscal 2019, Sonoco reported $5.37 billion in revenue. The Consumer Packaging segment generated more revenue, at 43%, than the other three segments. The Paper & Industrial Converted Products segment contributed almost 37%. Display & Packaging accounted for 11% and Protective Solutions accounted for almost 10%.
A substantial portion of Sonoco's product portfolio supports products considered essential.
As shown in the company's April investor presentation, in the Consumer Packaging segment, 80% is for food. Sonoco's current strategy, dubbed 20/20 Vision, has been focused on four major shifts in the consumer market, the first of which hones
