Favorable economic conditions such as robust consumer spending, a strong labor market and rising government expenditures support continued growth in the packaging industry. Moreover, the ever-increasing amount of goods shipped from coast to coast and around the world in cardboard boxes by e-commerce conglomerates like Amazon.com, Inc. (AMZN) and Alibaba Group Holding Limited (BABA) keeps driving demand for convenient and reliable packaging solutions. Global retail e-commerce sales tallied $2.84 trillion in 2018, and according to online store building platform Shopify Inc. (SHOP), sales will reach $4 trillion by 2020.
Packaging companies have recently emphasized minimizing costs and improving productivity to combat higher raw material prices and rising logistics expenses. Industry innovation not only looks for new ways to store and protect products but also how to do so in a sustainable fashion with minimal impact on the environment.
Despite any groundbreaking headline news, leading packaging stocks caught a bid in Tuesday's trading session, with several issues climbing over 2%. The three names discussed below have rallied from key technical levels and appear poised to continue their upward trajectory. Let's look at ways swing traders can capitalize.
WestRock Company (WRK)
WestRock Company (WRK), with a market capitalization of $9.51 billion, manufactures and sells corrugated packaging and consumer packaging solutions such as folding cartons and paperboard in the Americas, Europe, Asia and Australia. The packaging giant projects 2019 fiscal second quarter adjusted earnings to fall in a range between $700 million and $735 million – compared to $733 million reported in the first quarter. WestRock expects the 2018 acquisition of KapStone Paper and Packaging Corporation to deliver $200 million in cost synergies and enhance its presence across growing agricultural markets in the western United States. As of March 27, 2019, the stock pays an attractive 4.97% dividend yield and is up 0.94% for the year.
While WestRock shares remain entrenched in a downtrend, they bounced 2.87% from the lower trendline of a mini four-point descending channel in Tuesday's trading session. Traders who open a long position at these levels should target a move up to $42, where the stock may encounter resistance from an area of October price consolidation and the January swing high. Think about moving the stop to the breakeven point if the price reaches the channel pattern's upper trendline. Cut losing trades if the stock closes beneath this month's low at $35.96.
Sealed Air Corporation (SEE)
Sealed Air Corporation (SEE) operates through two segments: Food Care and Product Care. Its food packaging products such as Cryovac, Darfresh and Optidure help safely store and extend the shelf life of meats, poultry and dairy. The company's product solutions like Bubble Wrap, InstaPak and Jiffy Mailer target industrial and e-commerce markets. Sealed Air expects 2019 adjusted fiscal earnings from continuing operations to grow 4% to 6%. The package maker implemented a restructuring program in December last year to bolster growth and improve margins. Trading at $46.12 with a dividend yield of 1.42% and a market cap of $7.18 billion, the stock has surged 32.84% year to date (YTD), outperforming the industry average and S&P 500 Index by 14.41% and 20.41%, respectively, as of March 27, 2019.
Sealed Air shares have traded in a steep uptrend since late December, with the stock now sitting in bull market territory. After consolidating into to the 15-day simple moving average (SMA) and finding support from a horizontal line stretching back over the past two years, the share price jumped over 2% Tuesday to print a 52-week high at $46.14. Those who trade the breakout should set a take-profit order near $49 – an area where the stock may hit resistance from the December 2017 and January 2018 swing high. Alternatively, traders could use the 15-day SMA as a trailing stop to let profits run. Place a stop just below this month's consolidation to protect trading capital.
Packaging Corporation of America (PKG)
Packaging Corporation of America (PKG), founded back in 1867, manufactures and markets containerboard and corrugated packaging products. The Forest, Illinois-based company produces 3.9 million tons of containerboard and commands roughly 10% of the U.S. containerboard market. Packaging Corporation, which has a market value of $9.18 billion, expects first quarter 2019 earnings per share of $1.97 with solid demand in its packaging and paper segments tempered by high labor costs. Analysts have a 12-month price target on the stock at $106.55 – an 8.8% premium to Tuesday's $97.96 closing price. Packaging Corporation shares have risen 18.32% YTD as of March 27, 2019. Investors also receive a 3.32% dividend.
The packaging and container maker's share price has spent most of March trading within a tight range – roughly between $95 and $100. The stock pushed off the range's bottom trendline yesterday, closing up nearly 3%. Traders who buy at this level should bank profits on a rise to $105, where the price runs into resistance from the lower trendline of a clearly defined 2018 trading range. As the 200-day SMA may also provide overhead resistance, move stops to the breakeven point if the stock pushes above this respected technical indicator. Consider using the March 25 low at $93.91 as a stop-loss point.