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Crown Holdings (CCK) Hits 52-Week High: What's Driving the Rally?

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Shares of Crown Holdings, Inc. (CCK - Free Report) scaled a fresh 52-week high of $100.58 during the Dec 31 trading session, before retracting to close at $100.20. The company’s forecast-topping third-quarter 2020 results, soaring global beverage-can demand as well as focus on capacity expansions have contributed to this rally.

Share Price Performance

Shares of the company have gained 50.1% over the past six months, outperforming the industry’s growth of 32.3%.

Q3 Earnings & Sales Beat: Crown Holdings reported third-quarter 2020 adjusted earnings per share of $1.96, surpassing the Zacks Consensus Estimate of $1.60. The bottom line increased 25.6% year over year. Net sales of $3,167 million also outpaced the Consensus Mark of $3,060 million and improved 2.7% year over year.

Notably, the company has a trailing four-quarter average earnings surprise of 13.75%.

Driving Factors

Crown Holdings is anticipated to gain from a rise in global beverage-can demand as consumers are preferring cans over other packaging formats. Developing markets, such as Mexico and Brazil, have witnessed higher growth rates owing to rising per capita income and the consequent increase in beverage consumption. While the economies in Europe and North America are more mature, there are still growth opportunities aided by beverages, such as energy drinks, teas, juices, sparkling water and craft beer, and an increased preference for cans over certain other forms of beverage packaging. With its many inherent benefits, including being infinitely recyclable, the beverage can continues to gain popularity among marketers and consumers globally.

Crown Holdings continues to pursue growth opportunities through capacity-expansion projects and strategic acquisitions in a bid to meet the surging beverage-can demand. So far, the company has commercialized more than 2 billion units of annual production capacity across the Americas Beverage businesses, and will add more than 4.5 billion units of annual production capacity in the current year.

Construction is underway at a new state-of-the-art beverage can facility in Bowling Green, KY, which will likely commence operations in second-quarter 2021. Backed by the 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, WA plant, which is scheduled to start production in the third quarter. It will add a second line in its recently-constructed facility in Rio Verde, which is expected to commence operations during the July-September quarter.

Zacks Rank & Other Stocks to Consider

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

Some other top-ranked stocks in the Industrial Products sector include AGCO Corporation (AGCO - Free Report) , Avery Dennison Corporation (AVY - Free Report) and Ball Corporation (BLL - Free Report) . While AGCO flaunts a Zacks Rank #1 (Strong Buy), Avery Dennison and Ball Corp carry a Zacks Rank of 2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

AGCO has a long term earnings growth rate of 13.2%. The stock has appreciated 42% in three months’ time.

Avery Dennison has a long term earnings growth rate of 6.7%. Shares of the company have gained 23.1% in the past three months.

Ball Corp has a long term earnings growth rate of 5%. Over the past three months, the company’s shares have rallied 12.1%.

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