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Sonoco (SON) Hikes Prices for Rigid Paper Containers & Closures

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Sonoco Products Company (SON - Free Report) is implementing price hikes by 5% for all rigid paper containers and closures sold in North America. The price rise will be effective relating to the shipments on and after Jan 15, 2021.

Sonoco is executing price-rise actions in response to the rapidly-increasing costs for raw materials used in producing rigid paper containers. Input costs are currently under pressure due to rising prices for steel and recovered paper. The company’s focus on optimizing businesses through productivity improvement, standardization and cost control will aid its performance in the near term. In addition, negative impacts of price/cost will likely be offset by stable Old Corrugated Containers (OCC) price, which is the largest raw material used by the company's recycled paperboard mills. These factors are likely to improve Sonoco’s operating margins.

Sonoco expects its Consumer Packaging segment to gain from the demand from stay-at-home customers owing to the pandemic. Approximately 80% of the segment’s sales flow in from food packaging, where the company is witnessing increased orders. Further, its paperboard operations in North America are likely to be relatively steadier on elevated demand for the tissue and the towel market.

However, Sonoco’s industrial-related markets will continue to witness bleak demand due to the pandemic-induced shutdowns. The Paper and Industrial Converted Products segment will be affected by a negative price/cost relationship during the current quarter due to higher year-over-year recycled fiber costs and lower market pricing.

Price Performance

Shares of Sonoco have gained 24% over the past six months compared with the industry's growth of 27.9%.

Zacks Rank & Stocks to Consider

Sonoco currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the Industrial Products sector include iRobot Corporation (IRBT - Free Report) , Silgan Holdings Inc. (SLGN - Free Report) and SiteOne Landscape Supply, Inc. (SITE - Free Report) . While iRobot flaunts a Zacks Rank #1 (Strong Buy), Silgan and SiteOne Landscape carry a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

iRobot has an estimated earnings growth rate of 18.8% for the ongoing year. Shares of the company have gained 1.7% in the six months.

Silgan has a projected earnings growth rate of 37.9% for the current year. Over the past six months, the company’s shares have gained 12%.

SiteOne Landscape has an expected earnings growth rate of 28.6% for 2020. The stock has appreciated 34.5% over the past six months.

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