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Ball Corp (BLL) to Build Plant in Kentucky to Meet Demand Spike

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Ball Corporation (BLL - Free Report) intends to build a new aluminum end manufacturing facility in Bowling Green, KY. The facility will produce infinitely recyclable, lightweight aluminum ends and cater to regional as well as national customers for different beverage categories and brands. Production in the facility is expected to begin in early 2022 and Ball Corp stated it has plans to expand it further over the coming years.

Given its proximity to the main distribution routes, existing supply-chain partners, the regional labor base as well as an investment-friendly environment, Bowling Green is an apt choice. The new facility will likely generate 200 jobs in the state. The operation will also be Ball Corp’s first in the state and adds to its tally of more than 20 North American plants. Among these, two beverage-can manufacturing plants in Glendale, AZ, and Pittston, PA are currently under construction. While the Glendale plant is scheduled to start in early 2021, the Pittston plant is expected to begin production in mid-2021. These investments will help the company meet the unprecedented demand for sustainable aluminum packaging.

The investments are also in sync with Ball Corp’s “Drive for 10 vision” which entails five strategic levers that are key to growing its business and driving long-term growth. A key lever among these is to maximize value in the existing businesses by improving efficiencies in its facilities and expanding production across the company’s global plant network to meet current demand.

Overall global beverage can demand continues to grow as customers are now preferring cans over glass and plastic. By 2025, the global beverage can industry is projected to grow by approximately 100 billion units. Thus, Ball Corp has been primarily investing in aluminum packaging production, in a bid to cater to this rising demand. The company plans to add at least 25 billion units of capacity by 2023 end and sees an opportunity to add as much as 45 billion units of capacity by 2025.

Ball Corp’s aluminum cans, bottles and cups are infinitely recyclable and economically valuable. The company’s recently-launched infinity bottle will provide a sustainable solution for personal care products, as customers are shifting from small- to mid-sized plastic containers at hotels and stores.

Ball Corp continues to execute its strategies of achieving better value for standard products and higher growth for specialty products. Moreover, the company’s top-line performance is likely to gain from elevated demand in the consumer-oriented end markets, such as food and beverages, household, and healthcare, amid the COVID-19 pandemic. Also, higher at-home consumption is anticipated to spur beverage can demand.

The company maintains its expectation to deliver long-term diluted earnings per share growth of at least 10-15% beyond 2020 and achieve EVA (economic value added) dollars growth of 4-8% per year.

Price Performance

 

The stock has gained 35.9% over the past year compared with the industry’s growth of 37.4%.

Zacks Rank & Other Stocks to Consider

Ball Corporation currently carries a Zacks Rank #2 (Buy).

Other top-ranked stocks in the Industrial Products sector include AGCO Corporation (AGCO - Free Report) , Crown Holdings, Inc. (CCK - Free Report) and Avery Dennison Corporation (AVY - Free Report) , each carrying a Zacks Rank of 2, at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AGCO has a long-term earnings growth rate of 13.2%. The stock has appreciated 51% in a year’s time.

Crown Holdings has a long-term earnings growth rate of 5%. Shares of the company have gained 42% in the past year.

Avery Dennison has a long-term earnings growth rate of 6.7%. Over the past year, the company’s shares have rallied 27%.

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