12 Undervalued Cyclical Stocks to Buy Right Now

6. Crown Holdings, Inc. (NYSE:CCK)

Forward P/E Ratio: 14.15

Earnings Growth: 21.77%

Number of Hedge Fund Holders: 43

Crown Holdings, Inc. (NYSE:CCK) is a major company that specializes in packaging products for both consumer and industrial markets. It is recognized as the second-largest manufacturer of aluminum cans internationally. Vulcan Value Partners purchased positions in Crown Holdings, Inc. (NYSE:CCK) during the fourth quarter of 2024.

The investment management company pointed out that there are two significant competitive advantages for the company. Firstly, the aluminum can industry is a rational industry with high barriers to entry. Secondly, aluminum cans are being preferred over other materials such as plastics as aluminum is considered more sustainable. Both of these advantages allow Crown Holdings, Inc. (NYSE:CCK) to generate stable margins and robust free cash flow.

Moreover, on January 23, Arun Viswanathan, an analyst at RBC Capital, maintained a Buy rating on the stock keeping the price target at $113. During the fiscal third quarter of 2024, the company’s global beverage business which deals with cans grew 5% year-over-year, with increased shipments across all key markets. As a result, the operational income of the company grew from $374 million to $444 million year-over-year. It is an undervalued cyclical stock to buy right now. Vulcan Value Partners stated the following regarding Crown Holdings, Inc. (NYSE:CCK) in its Q4 2024 investor letter:

“We purchased six new positions during the quarter: Sodexo SA, Crown Holdings Inc., Heineken NV, Rentokil Initial plc, Pernod Ricard SA, and UnitedHealth Group Inc. Crown Holdings, Inc. (NYSE:CCK) is the second largest manufacturer of aluminum beverage cans globally. The beverage “can” industry is a consolidated and rational industry with high barriers to entry. The industry structure, scale, and long-term contracts with inflationary pass-throughs result in solid and stable margins, high returns on capital, and robust free cash flow. While inflation has been a slight headwind, volumes are growing as aluminum cans are taking share from other substrates, most notably plastic, as aluminum is considered a better, more sustainable product. Additionally, through free cash flow generation and the proceeds from the sale of a minority investment, Crown has de-levered, putting the company in a position to buy back shares at a discount to our estimate of intrinsic value.”