Amcor Plc (AMCR Quick QuoteAMCR - Free Report) is well-poised for growth, backed by its focus on growing its share in high-growth segments and emerging markets and launching innovative products. Its segments, Flexibles and Rigid Packaging, are benefiting from strong demand across end markets. Consumers’ growing awareness and consequent increase in demand for sustainably packaged products are acting as key catalysts.

The company currently has a Zacks Rank #2 (Buy) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.

Let's delve deeper into the factors that make Amcor a compelling investment option at the moment.

Solid Q3 Performance

Amcor reported third-quarter fiscal 2022 earnings of 21 cents, which reflected an improvement of 15% from the year-ago quarter. The bottom line beat the Zacks Consensus Estimate of 20 cents. The company has a trailing four-quarter earnings surprise of 2.4%, on average.

Strong Demand Supports Fiscal 2022 View

Both the Rigid Packaging and Flexible Packaging segments are performing well through a combination of organic growth and disciplined cost control. The Flexibles segment has witnessed growth in volumes in medical, condiments, liquid beverage and confectionary end markets so far in fiscal 2022 in North America. In Europe, higher volumes were reported in pet food, healthcare, premium coffee, meat and confectionary end markets. The Rigid packaging segment is seeing strong consumer demand. In North America, beverage volumes were up 2% year over year in the first nine-month period of fiscal 2022, and hot fill container volumes were up 2%. The segment is seeing volume growth in isotonics, as well as iced tea categories, where customer demand for 100% recycled PET bottles has been strong. Higher-at-home consumption of packaged beverages and the introduction of new health and wellness-oriented products in PET containers is supporting demand.

Backed by ongoing momentum in end markets, Amcor expects adjusted constant currency EPS growth of approximately 9.5-11%. The guidance anticipates EPS in the range of 79.5 cents to 81 cents for fiscal 2022. Price increases to counter higher raw material costs will aid margins.

Price Performance

Image Source: Zacks Investment Research

Shares of the company have gained 15.5% in the past three months, compared with the industry’s growth of 4.7%.

Upbeat Growth Projections

The Zacks Consensus Estimate for Amcor’s fiscal 2022 earnings per share is currently pegged at 81 cents, indicating growth of 9.5% from fiscal 2021. The same for fiscal 2023 stands at 84 cents, suggesting a year-over-year improvement of around 4%.

The stock has an estimated long-term earnings growth rate of 9.8%.

Strategies to Grow Business in Place

Backed by its strong balance sheet and annual free cash flow in excess of $1 billion, the company continues to invest in higher-growth, higher value-added, more packaging-intensive segments like healthcare, protein, pet food, premium coffee and hot fill beverage containers.  Amcor has a leading position in each of these categories. Together these generate over $4 billion in annual sales. The growth rates in all these segments are higher than the average across broader consumer markets, indicating significant growth potential.

Emerging markets will continue to be a key driver of organic growth. Amcor is constantly striving to meet ever-evolving consumer needs through innovation. To this end, the company invests around $100 million annually in R&D.

Amcor acquired Bemis Company in June 2019, creating a global leader in consumer packaging. The buyout expanded the company's global footprint, opened up new attractive end markets and customers for its products, and greater economies of scale that drove efficiencies and higher margins. Amcor expects total cost synergies in fiscal 2022 to be at least 10% higher than its original target of $180 million. The buyout is anticipated to lead to more than 200 basis point expansion in the Flexible segment’s margins in fiscal 2022 compared to fiscal 2019 levels.

Owing to the surge in e-commerce activities, packaging has gained importance as it maintains the integrity and durability of a product during the complex delivery process. Consumers’ increasing demand for more sustainable packaged products represents a major growth opportunity. Amcor has committed all of its packaging to be recyclable or reusable by 2025. Amcor has doubled the use of post-consumer recycled resin (PCR) in the last two years.

Other Stocks to Consider

Some other top-ranked stocks in the Industrial Products sector are Graphic Packaging Holding Company (GPK Quick QuoteGPK - Free Report) , Myers Industries (MYE Quick QuoteMYE - Free Report) and Packaging Corporation of America (PKG Quick QuotePKG - Free Report) .  All of these stocks flaunt a Zacks Rank #1.

Graphic Packaging has an estimated earnings growth rate of 86.8% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 7.6%.

Graphic Packaging pulled off a trailing four-quarter earnings surprise of 7.2%, on average. The company’s shares have appreciated 10% in the past three months.

Myers Industries has an expected earnings growth rate of 67% for 2022. The Zacks Consensus Estimate for the current year’s earnings has moved up 27% in the past 60 days.

MYE has a trailing four-quarter earnings surprise of 20.1%, on average. Myers Industries’ shares have surged 52% in the past three months.

Packaging Corporation has an expected earnings growth rate of 16.2% for 2022. The Zacks Consensus Estimate for the current year’s earnings rose 4.2% in the past 60 days.

PKG has a trailing four-quarter earnings surprise of 19.6%, on average. Packaging Corporation’s shares have climbed 7% over the past three months.