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Crown Holdings (CCK) Strong on Solid Beverage Can Demand

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On Aug 28, we issued an updated research report on Crown Holdings Inc. (CCK - Free Report) . The company will benefit from solid global beverage-can demand and investments in capacity to meet the same. Strategic acquisitions to expand its geographic presence and product line, as well as focus on cost control, will also drive growth.

Rising Demand for Beverage Cans Bodes Well

The beverage can continues to gain from the increasing preference among marketers and consumers globally with its inherent benefit of being infinitely recyclable. Crown Holdings is anticipated to gain from this trend.

The company anticipates the North American market to remain solid this year on strong beverage-can demand. Beverage can volumes remained strong in Brazil, Europe, Southeast Asia and the United States as consumers continue to increasingly prefer cans over other packaging options. The European food can demand remains strong, indicating solid third-quarter crop yields. Consumer activity in Latin America is strong on robust demand. Moreover, sales volumes in the Asia Pacific will improve gradually in the third and fourth quarters as demand picks up across the region.

Investments in Capacity to Boost Growth

To meet the rising beverage-can demand, Crown Holdings intends to build new facilities and is poised to gain from the geographic expansion of beverage-can lines. Earlier this year, the company commenced production on the third production line at the Toronto, Ontario, beverage can plant to meet the increasing demand of customers.

In the June-end quarter, Crown Holdings completed the conversion of two beverage can capacity lines in Seville, Spain, from steel to aluminum. In June, the company began commercial production on the third line at the Nichols, NY facility. Last month, it commenced operations in a new one-line beverage plant in NongKhae, Thailand.

During the March-end quarter, the company started building a new state-of-the-art beverage-can facility in Bowling Green, KY, which is expected to start operations in second-quarter 2021. Backed by rising demand expectations, the company announced that it will add a second line to that facility that will come online in late third-quarter 2021. To meet the expanding requirements of specialty cans in the Pacific Northwest, the company will construct a third line in the Olympia, Washington plant, which is scheduled to commence production during the third quarter of 2021.

Moreover, Crown Holdings is focused on disciplined pricing, cost control and capital allocation. The company’s efforts to pursue growth opportunities through capacity additions to existing plants, building new plants in existing markets along with acquisitions in geographic areas and product lines will drive growth.

Price Performance

The company’s shares have gained 17.3% over the past year, outperforming the industry’s growth of 6.1%.

Zacks Rank & Other Stocks to Consider

Crown Holdings currently carries a Zacks Rank #2 (Buy).

A few other top-ranked stocks in the Industrial Products sector include Silgan Holdings, Inc. (SLGN - Free Report) , IIVI Incorporated and SiteOne Landscape Supply, Inc. (SITE - Free Report) . While Silgan and IIVI sport a Zacks Rank #1 (Strong Buy), SiteOne carries a Zacks Rank of 2, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Silgan has a projected earnings growth rate of 28.7% for 2020. The company’s shares have appreciated 28.4% over the past year.

IIVI has an estimated earnings growth rate of 29% for the ongoing year. The company’s shares have gained 18.1% in a year’s time.

SiteOne Landscape has an expected earnings growth rate of 15.4% for the current year. The stock has surged 61.6% over the past year.

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