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2 Containers - Paper and Packaging Stocks to Buy Despite Industry Woes
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The Zacks Containers - Paper and Packaging industry has been facing weak demand due to lower consumer spending amid an inflationary backdrop. Pricing actions implemented by the industry players will help offset the impacts of supply-chain disruptions and elevated costs and tariffs. The industry will eventually gain support from rising e-commerce activities and solid demand for sustainable and eco-friendly packaging options due to increasing environmental concerns.
Companies like Brambles Limited (BXBLY - Free Report) and Karat Packaging (KRT - Free Report) are set to gain from their efforts to capitalize on these trends.
About the Industry
The Zacks Containers - Paper and Packaging industry comprises companies that manufacture paper and plastic packaging products. The packaging solutions provided by the industry help protect and preserve products, extend the shelf life and cut down on wastage and loss across the wide and lengthy range of distribution channels. The products range from containerboard and corrugated packaging to flexible and rigid plastic packaging. Some companies manufacture dispensing pumps, closures, aerosol valves and applicators for the beauty, personal, home care and healthcare markets. The industry serves a wide array of markets, including food, beverage, food services and other consumer products, such as beauty, personal care and home care. They also cater to the chemical, agribusiness, medical, pharmaceutical, electronics and industrial markets, to name a few.
What's Shaping the Future of the Containers - Paper and Packaging Industry
Industry Facing Weak Demand, High Costs & Tariffs: The industry has been witnessing volume declines due to lower consumer spending on goods, as elevated inflation and higher interest rates have dampened consumer spending. Slowdown in housing and industrial activity has also impacted demand for packaging used in appliances, furniture and construction-related products. Customers have been lowering their inventory, which had built up in response to high demand and supply-chain issues. Producers had to announce downtime, curtailments and selective mill closures, which had an impact on their top-line performances. Higher material, labor and transportation costs and imposition of tariffs added to the margin pressure. The companies have been implementing pricing strategies and cost-reduction actions to negate these headwinds. They are also streamlining their operations and taking steps to realign with high-growth key markets to bolster their performance.
E-commerce Acts as a Key Catalyst: With rising e-commerce activities over the years, the importance of packaging has increased manifold as it maintains the integrity and durability of a product. Packaging also helps withstand the complex product delivery process. E-commerce is expected to surge due to rising Internet penetration, widespread smartphone adoption and the convenience of shopping online. Advancements in digital payments, logistics and personalization are making the online shopping experience faster, safer and more customer-centric. This presents a major growth opportunity for the Containers - Paper and Packaging industry. Also, the industry has significant exposure (more than 60%) to consumer-oriented end markets, such as food and beverages, as well as healthcare. Demand for packaging applications remains fairly stable for these sectors across economic cycles, thus ensuring consistent demand for packaging solutions.
Demand for Eco-Friendly Packaging to Aid Industry: The preference for environmentally friendly biodegradable packaging materials is seeing a steady rise globally, driven by customers’ increasing awareness of environmental issues. The industry is constantly striving to meet the same by adopting the latest technology and bringing innovative products. Industry players have begun incorporating recycled content into production methods. By maximizing recycling, the industry can implement environmentally and economically sustainable production methods.
Zacks Industry Rank Indicates Bleak Prospects
The Zacks Containers - Paper and Packaging industry is a 10-stock group within the broader Zacks Industrial Products sector. The industry currently carries a Zacks Industry Rank #195, which places it at the bottom 20% of the 244 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates weak prospects in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Despite the dim near-term prospects of the industry, we will present a few stocks that you may want to consider for your portfolio. However, it is worth taking a look at the industry’s shareholder returns and current valuation first.
Industry Versus Broader Market
The Containers - Paper and Packaging industry has underperformed its sector and the S&P 500 over the past year. The industry has declined 7.8% against the sector’s growth of 40.5%. Meanwhile, the S&P 500 has gained 29.9%.
One-Year Price Performance
Industry's Current Valuation
The trailing 12-month EV/EBITDA ratio, a commonly used multiple for valuing Containers - Paper and Packaging companies, shows that the industry is currently trading at 11.29X compared with the S&P 500’s 17.76X and the Industrial Products sector’s trailing 12-month EV/EBITDA of 20.57X. This is shown in the charts below.
Enterprise Value/EBITDA (EV/EBITDA) Ratio TTM
Enterprise Value/EBITDA (EV/EBITDA) Ratio TTM
Over the last five years, the industry traded as high as 15.58X and as low as 10.06X, with the median at 11.88X.
2 Containers - Paper and Packaging Stocks to Bet on
Karat Packaging: The company delivered a strong fourth quarter 2025, achieving profitable growth, double-digit volume gains and positive pricing for the first time since the first quarter of 2023, despite a challenging macro backdrop. Its diversified sourcing strategy helped strengthen the global supply chain and also maintain a 34% gross margin even amid higher tariffs and duties. KRT’s new paper bags product category remains a key growth driver, with steady expansion and strong revenue contribution. In 2025, the company secured a major contract with a leading national chain and is pursuing additional opportunities, some nearing final approval. It is also strengthening this category by supplying generic paper bags to smaller customer accounts and expects to increase market share in this category. The company plans to expand its product pipeline, focusing on eco-friendly innovation to strengthen its competitive advantage. KRT’s growth will be supported by rising demand for sustainable products, increased food delivery and take-out consumption. KRT is ramping up its manufacturing capabilities to meet the growing demand and implementing initiatives to significantly boost online sales. KRT shares have gained 18.4% in the past year.
The Zacks Consensus Estimate for Karat Packaging’s 2026 earnings indicates year-over-year growth of 25.5%. The estimate has moved up 21% over the past 60 days. The Chino, CA-based company has long-term estimated earnings growth of 13% and currently sports a Zacks Rank #1 (Strong Buy).
Brambles: The company is winning new customers across key markets, driven by its enhanced sales capabilities and improved customer value proposition. It has improved its delivery and collection performance, reduced complaint resolution times and invested in pallet quality to support customers’ evolving supply-chain needs. These efforts, along with steady new business wins, helped offset weaker volumes from existing customers amid soft demand in the US, Latin America and Europe, as well as inventory optimization in Australia. The company also delivered margin expansion supported by improved supply-chain efficiency and overhead productivity, including benefits from last year’s cost reduction program, which helped navigate a subdued demand environment. These operational efficiencies boosted profitability and cash flow generation, enabling investment in strategic initiatives to enhance the customer experience, generate additional efficiencies across operations and progress digital transformation to strengthen its long-term competitive advantage. The company’s shares have gained 23.7% in the past year.
The Zacks Consensus Estimate for the Sydney, Australia-based company’s current-year earnings has moved up 3% over the past 60 days. The estimate indicates year-over-year growth of 11.8%. BXBLY currently carries a Zacks Rank #2 (Buy).
Price: BXBLY
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2 Containers - Paper and Packaging Stocks to Buy Despite Industry Woes
The Zacks Containers - Paper and Packaging industry has been facing weak demand due to lower consumer spending amid an inflationary backdrop. Pricing actions implemented by the industry players will help offset the impacts of supply-chain disruptions and elevated costs and tariffs. The industry will eventually gain support from rising e-commerce activities and solid demand for sustainable and eco-friendly packaging options due to increasing environmental concerns.
Companies like Brambles Limited (BXBLY - Free Report) and Karat Packaging (KRT - Free Report) are set to gain from their efforts to capitalize on these trends.
About the Industry
The Zacks Containers - Paper and Packaging industry comprises companies that manufacture paper and plastic packaging products. The packaging solutions provided by the industry help protect and preserve products, extend the shelf life and cut down on wastage and loss across the wide and lengthy range of distribution channels. The products range from containerboard and corrugated packaging to flexible and rigid plastic packaging. Some companies manufacture dispensing pumps, closures, aerosol valves and applicators for the beauty, personal, home care and healthcare markets. The industry serves a wide array of markets, including food, beverage, food services and other consumer products, such as beauty, personal care and home care. They also cater to the chemical, agribusiness, medical, pharmaceutical, electronics and industrial markets, to name a few.
What's Shaping the Future of the Containers - Paper and Packaging Industry
Industry Facing Weak Demand, High Costs & Tariffs: The industry has been witnessing volume declines due to lower consumer spending on goods, as elevated inflation and higher interest rates have dampened consumer spending. Slowdown in housing and industrial activity has also impacted demand for packaging used in appliances, furniture and construction-related products. Customers have been lowering their inventory, which had built up in response to high demand and supply-chain issues. Producers had to announce downtime, curtailments and selective mill closures, which had an impact on their top-line performances. Higher material, labor and transportation costs and imposition of tariffs added to the margin pressure. The companies have been implementing pricing strategies and cost-reduction actions to negate these headwinds. They are also streamlining their operations and taking steps to realign with high-growth key markets to bolster their performance.
E-commerce Acts as a Key Catalyst: With rising e-commerce activities over the years, the importance of packaging has increased manifold as it maintains the integrity and durability of a product. Packaging also helps withstand the complex product delivery process. E-commerce is expected to surge due to rising Internet penetration, widespread smartphone adoption and the convenience of shopping online. Advancements in digital payments, logistics and personalization are making the online shopping experience faster, safer and more customer-centric. This presents a major growth opportunity for the Containers - Paper and Packaging industry. Also, the industry has significant exposure (more than 60%) to consumer-oriented end markets, such as food and beverages, as well as healthcare. Demand for packaging applications remains fairly stable for these sectors across economic cycles, thus ensuring consistent demand for packaging solutions.
Demand for Eco-Friendly Packaging to Aid Industry: The preference for environmentally friendly biodegradable packaging materials is seeing a steady rise globally, driven by customers’ increasing awareness of environmental issues. The industry is constantly striving to meet the same by adopting the latest technology and bringing innovative products. Industry players have begun incorporating recycled content into production methods. By maximizing recycling, the industry can implement environmentally and economically sustainable production methods.
Zacks Industry Rank Indicates Bleak Prospects
The Zacks Containers - Paper and Packaging industry is a 10-stock group within the broader Zacks Industrial Products sector. The industry currently carries a Zacks Industry Rank #195, which places it at the bottom 20% of the 244 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates weak prospects in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Despite the dim near-term prospects of the industry, we will present a few stocks that you may want to consider for your portfolio. However, it is worth taking a look at the industry’s shareholder returns and current valuation first.
Industry Versus Broader Market
The Containers - Paper and Packaging industry has underperformed its sector and the S&P 500 over the past year. The industry has declined 7.8% against the sector’s growth of 40.5%. Meanwhile, the S&P 500 has gained 29.9%.
One-Year Price Performance
Industry's Current Valuation
The trailing 12-month EV/EBITDA ratio, a commonly used multiple for valuing Containers - Paper and Packaging companies, shows that the industry is currently trading at 11.29X compared with the S&P 500’s 17.76X and the Industrial Products sector’s trailing 12-month EV/EBITDA of 20.57X. This is shown in the charts below.
Enterprise Value/EBITDA (EV/EBITDA) Ratio TTM
Enterprise Value/EBITDA (EV/EBITDA) Ratio TTM
Over the last five years, the industry traded as high as 15.58X and as low as 10.06X, with the median at 11.88X.
2 Containers - Paper and Packaging Stocks to Bet on
Karat Packaging: The company delivered a strong fourth quarter 2025, achieving profitable growth, double-digit volume gains and positive pricing for the first time since the first quarter of 2023, despite a challenging macro backdrop. Its diversified sourcing strategy helped strengthen the global supply chain and also maintain a 34% gross margin even amid higher tariffs and duties. KRT’s new paper bags product category remains a key growth driver, with steady expansion and strong revenue contribution. In 2025, the company secured a major contract with a leading national chain and is pursuing additional opportunities, some nearing final approval. It is also strengthening this category by supplying generic paper bags to smaller customer accounts and expects to increase market share in this category. The company plans to expand its product pipeline, focusing on eco-friendly innovation to strengthen its competitive advantage. KRT’s growth will be supported by rising demand for sustainable products, increased food delivery and take-out consumption. KRT is ramping up its manufacturing capabilities to meet the growing demand and implementing initiatives to significantly boost online sales. KRT shares have gained 18.4% in the past year.
The Zacks Consensus Estimate for Karat Packaging’s 2026 earnings indicates year-over-year growth of 25.5%. The estimate has moved up 21% over the past 60 days. The Chino, CA-based company has long-term estimated earnings growth of 13% and currently sports a Zacks Rank #1 (Strong Buy).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Price: KRT
Brambles: The company is winning new customers across key markets, driven by its enhanced sales capabilities and improved customer value proposition. It has improved its delivery and collection performance, reduced complaint resolution times and invested in pallet quality to support customers’ evolving supply-chain needs. These efforts, along with steady new business wins, helped offset weaker volumes from existing customers amid soft demand in the US, Latin America and Europe, as well as inventory optimization in Australia. The company also delivered margin expansion supported by improved supply-chain efficiency and overhead productivity, including benefits from last year’s cost reduction program, which helped navigate a subdued demand environment. These operational efficiencies boosted profitability and cash flow generation, enabling investment in strategic initiatives to enhance the customer experience, generate additional efficiencies across operations and progress digital transformation to strengthen its long-term competitive advantage. The company’s shares have gained 23.7% in the past year.
The Zacks Consensus Estimate for the Sydney, Australia-based company’s current-year earnings has moved up 3% over the past 60 days. The estimate indicates year-over-year growth of 11.8%. BXBLY currently carries a Zacks Rank #2 (Buy).
Price: BXBLY