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Packaging Corporation of America: Might Be Worth Packing Into Your Portfolio


  • Packaging Corporation of America has seen a bit of a bumpy ride financially in recent years, but performance as of late has been encouraging.
  • The company is fundamentally robust right now, with strong cash flows and low debt.
  • Shares also look attractively priced and might offer some decent upside moving forward.
  • Looking for a helping hand in the market? Members of Crude Value Insights get exclusive ideas and guidance to navigate any climate. Learn More »

Cardboard boxes on conveyor belt. parcels transportation system concept

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These days, there exist a number of packaging companies, some large and some small, that warrant investor attention. One such player that tilts on the large side is a company called Packaging Corporation of America

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This article was written by

Daniel Jones profile picture

Daniel is an avid and active professional investor.

He runs Crude Value Insights, a value-oriented newsletter aimed at analyzing the cash flows and assessing the value of companies in the oil and gas space. His primary focus is on finding businesses that are trading at a significant discount to their intrinsic value by employing a combination of Benjamin Graham's investment philosophy and a contrarian approach to the market and the securities therein. Learn more.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (6)

At present, the company operates eight different mills and nine corrugated products plants and related facilities across the US.

Corrugated plants is 90 not 9
Thanks for the article. Not many get written on this company. While I appreciate the brevity of the information, it reads a little bit like a summary of the annual report.

I have been an owner of these shares for almost 10 years and I can say that this company is well run and in a business with high demand products due to the explosion of e-commerce.

However there's a lot of overhead with labor and the cost of keeping equipment running or converting the equipment from making one product to another. Their cost of materials is up quite a bit, but I believe they are pretty successful at passing on the costs by raising prices in an inflationary environment.

My opinion is that this is certainly not a company to try and beat the S&P 500 with. They pay a nice dividend and the company has been around since the end of the civil war. So it's one of those companies that makes things and makes a profit and isn't going anywhere, but it's not going to be a market beating.

I would consider it more of an alternative to low-yielding bonds and an investment for someone with less than 5 years to retirement who needs some low-beta investments with steady and rising income.

A good entry point is around $140 because next year's earnings are expected to be a little flat.
@chipb You're spot on -- been in the shares since 2008, terrific shareholder focused management team that invests in the business and is willing to share the proceeds through the dividend. Consistently solid operators throughout the cycle. The only point I might quibble with is the notion that it is low-beta and therefore an alternative in a portfolio to fixed income: this business is leveraged to the economy, and if there is a real decline in consumption of goods, there will be a commensurate decline in the consumption of corrugated products, and it will move, down. Then go ahead and buy!
@IL Cricket I completely understand what you are saying and agree that it will definitely move up and down with the economy.

I guess what I meant is instead of a 1% bond, you can get a +3% yield that grows 10% a year and a stock price that won't kill you provided that you do not buy at the top and sell at the bottom--you have to get in at a halfway decent valuation ($140), then hold on through the cycles.

And if this company has survived two world wars, the depression, the financial crisis and covid, it's not going to go out of business
@chipb I sell calls on PKG 'cause my basis is way too low to actually part with the shares when the get ahead of themselves. Only problem is that whoever makes the mkt in the options keeps the bid/ask way too wide -- maybe the most ridiculous spreads I've seen of just about any stock. So liquidity is low. As long as there isn't a recession, I agree that 140 is a good entry point.
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