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Why Amcor Stock Is Jumping Higher Today

By Rich Duprey – Updated Jun 12, 2020 at 11:24AM

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The packaging industry isn't the most exciting one to attract the investment crowd.

What happened

Shares of packaging specialist Amcor (AMCR -0.19%) were up 7% heading into midday trading on Friday as the markets rebounded from Thursday's rout.

So what

The stock of the maker of rigid and flexible packaging for food, beverage, pharmaceutical, and personal-care products has fallen 16% in the last week after butting up near its 52-week highs. As the economy reopens and business normalizes, product packaging across the broad swaths of the economy Amcor services ought to be in high demand.

Woman drinking out of plastic bottle

Image source: Getty Images.

Now what

Amcor seems range-bound by an $11 per share ceiling that it has had difficulty breaking through over the past year. But unlike other businesses that have refused to provide a forecast for the year due to the pandemic, the packaging leader recently updated its guidance to say it foresees earnings per share rising 11% to 12% this year, with free cash flow topping $1 billion before certain expenses.

It continues to integrate the Bemis acquisition it made last year, which opened up new markets and opportunities for growth. Because of the markets it serves, its business offers a level of stability even through grave economic upheavals such as the pandemic.

Amcor pays a dividend that it has increased for 25 consecutive years, making it a Dividend Aristocrat.

Its valuation may be a little pricey based on certain metrics, but at 13 times next year's earnings estimates, it may be seen as a reasonable value.

 

Rich Duprey owns shares of Amcor plc. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Amcor plc Stock Quote
Amcor plc
AMCR
$10.73 (-0.19%) $0.02

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