COMPANY DESCRIPTION

Sonoco Products manufactures industrial and consumer packaging products and provides packaging services. Co. has four segments: Consumer Packaging, which includes containers and trays, plastic bottles and jars, membrane ends and closures; Paper and Industrial Converted Products, which includes tubes and cores, construction tubes and forms, wire and cable reels and spools, and recycled paperboard, linerboard, and corrugating medium; Display and Packaging, which provides point-of-purchase displays, supply chain management services, and paper amenities; and Protective Solutions, which provides foam protective packaging, temperature-assurance packaging, and retail security packaging. 

 

ECONOMIC MOAT

Sonoco has no moat.  It relies on superior execution for success.

 

OUTLOOK

Sonoco is focusing on faster-growing markets. Sonoco is purchasing a majority stake in a Brazilian producer. SO ordered new presses for North America. In composite cans, new capacity was added in Poland, Malaysia, and China in 2014, and plans are for continued Asian expansion this year. A new Protective Solutions plant in Kentucky serving the automotive industry just became operational. The segment is also introducing temperature-controlled products (medical, food, etc.) at a brisk pace. The stock has a decent risk/reward profile. Free cash flow will be used to reduce debt related to the acquisition. 

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STRENGTHS

  • Diversified portfolio of products and solutions in industrial and consumer packaging markets

  • Vertical integration helps Sonoco maintain margins

  • Diversified end markets 

WEAKNESSES

  • Concentrated geographic operations

  • Legal proceedings likely to impact corporate image 

THREATS

  • Significant competition

  • Stringent environmental regulations

  • Fluctuating prices of raw materials 

OPPORTUNITIES

  • Global food and beverage packaging market poised for positive growth

  • Global protective packaging market set for rapid growth 

The above report is for information purposes only, and is not a solicitation or offer to buy or sell any securities. Past performance is no guarantee of future performance. Neither diversification nor asset allocation ensures a profit or guarantees against loss. Before investing, investors should consider their risk tolerance, investment objectives, time horizon, available capital, and charges and expenses.  

 

The information presented in this report has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guranteed. All material is subject to change without notice. The views and opinions expressed are those of Focused Stock Research and/or WALT ST Investment Management, Ltd. and in no way reflect the views and opinions of Investment Consultants nor their Broker Dealers.

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