We recently published a list of 10 Best Packaging Stocks to Buy According to Analysts. In this article, we are going to take a look at where Graphic Packaging Holding Company (NYSE:GPK) stands against other best packaging stocks to buy according to analysts.
An Overview of the Global Packaging Market
According to a report by Mordor Intelligence, the packaging market size is estimated at $1.14 trillion in 2024 and is expected to grow to $1.38 trillion by 2029, growing at a compound annual growth rate of 3.89% during the forecast period (2024-2029).
Region-wise, Asia Pacific is the fastest-growing region in the packaging market, with plastic packaging being widely utilized in the region. India and China’s food and beverage markets are contributing to this utilization. Japan is another major consumer of paper-based products in diverse sectors.
Market trends reflect that paper and paperboard packaging products are to witness the highest growth. There has been an increasing demand for eco-friendly packaging with minimal environmental footprint. In this regard, paper-based solutions such as bags, pouches, and cartons, have driven a surge in sustainable packaging adoption. The demand for eco-friendly paper packaging solutions is also coming from the environmental regulations on non-biodegradable and non-recyclable packaging solutions as well as the rising trend of online retail.
The perception of customers regarding paper and paperboard packaging being more environmentally friendly than plastic packaging is also shaping this demand. Gen Z is especially more inclined towards the rising sustainability trend. Oisin Hanrahan, the CEO and co-founder of Keychain, described the prevalent Gen Z consumer preferences by stating:
“Gen Z has a unique preference for conscious consumption when compared to any generation, which provides a huge opportunity for brands to win them over with sustainable ingredients, packaging, and practices”
Is Generative AI the Future of the Packaging Industry?
As reported by McKinsey & Company, the packaging industry has historically been behind other sectors in terms of adopting new technologies such as traditional AI and machine learning. However, a recent survey of over 200 paper and packaging executives across substrates and geographies revealed that executives recognize the potential of generative AI to drive business value. While approximately 95% of the respondents believed their companies should invest in gen AI, 77% said that their companies have moderate to strong intentions to use the technology in the near future.
In regards to the current adoption of gen AI, 24% of respondents reported that they either have launched or are developing generative AI tools or solutions in their area of work. A majority of those who had implemented gen AI saw its generated impacts as meeting or exceeding expectations. Survey respondents also expect generative AI to enable revenue growth and cost savings. They believed that opportunities to use generative AI are present across the packaging and paper value chain. The technology can also help generate new ideas through intellectual property and patent analytics, give customer analysis, and create customization options. Gen AI is expected to have the most profound impact on the commercial side of the industry for instance increasing sales team productivity, optimizing marketing spend, and improving pricing capabilities for companies.
While generative AI has an obvious advantage over traditional Artificial Intelligence since it can deal with messier data and offers easier adoption because of its accessible user interface, players in the paper and packaging industry are still subject to challenges. These challenges include limited access to data and to a modern data tech stack, gen AI’s use causing intellectual property or privacy concerns, limited understanding of use cases to drive value in commercial activities, associated costs, and resistance to change among others.
Our Methodology
In order to compile a list of the 10 best packaging stocks to buy according to analysts, we first used a stock screener to make an extended list of the relevant companies with the highest market caps. Moving on, we shortlisted the top 10 stocks from our list which had the highest average upside potential. The 10 best packaging stocks to buy according to analysts have been arranged in ascending order of their average upside potential, as of November 1.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Workers in protective gear carrying packages of coated unbleached kraft for shipping.
Graphic Packaging Holding Company (NYSE:GPK)
Average Upside Potential: 12.58%
Number of Hedge Fund Holders: 27
Graphic Packaging Holding Company (NYSE:GPK) is a leading sustainable consumer packaging company. The company’s packaging solutions are made primarily with renewable or recycled materials. Graphic Packaging Holding Company is headquartered in Atlanta, Georgia.
GPK has a global network of design and manufacturing facilities and serves the most widely recognized global brands in food, beverage, food service, household, and other consumer products. The company boasts a diversified portfolio that moves with the consumer to deliver consistency and growth. It has also pursued key acquisitions that have expanded design and execution capabilities. Also, GPK is a leader in innovation with its focus on reducing the environmental footprint of consumer packaging.
The firm’s recent third-quarter highlights include positive packaging volume growth and innovation sales growth of $54 million. Some developments in the quarter include the launch of new paperboard cup and container innovations for major food service customers as well as the first-ever round Boardio paperboard canister for a leading collagen-protein brand.
Graphic Packaging Holding Company (NYSE:GPK) is a global leader in sustainable consumer packaging. With an unmatched product offering in depth and breadth, well-known global consumer brands as customers, and the rising demand for sustainable packaging, GPK is an attractive packaging stock to consider. The stock has an average upside of 12.58%, as of November 1.
Overall, GPK ranks 8th on our list of best packaging stocks to buy according to analysts. While we acknowledge the potential of GPK as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than GPK but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
