Sonoco Hits Fresh 52-Week High Riding On Growth Prospects

Shares of Sonoco Products Co. (NYSE:SON) , a global manufacturer of consumer and industrial packaging products, reached a fresh 52-week high of $50.70 on Jul 7, marking an all-time high for the stock.

The company has delivered a year to date return of about 22.14%. Sonoco has a market cap of $5.04 billion. Average volume of shares traded over the last 3 months stood at approximately 482K.

Sonoco has long-term estimated earnings per share growth rate of 5.90%. The company has outperformed the Zacks Consensus Estimate in two of the four trailing quarters with an average positive surprise of 1.36%.

What’s Driving Up Sonoco?

Estimates have been stable lately, ahead of Sonoco’s Q2 earnings release. The Zacks Consensus Estimate is at 68 cents, within the company’s guidance of 65-70 cents.

Despite a weak outlook for the second quarter due to strong results in the year-ago quarter and tough market conditions affecting its corrugating medium operation and headwinds from a strong U.S. dollar and generally flat-to-weak economic conditions, Sonoco expects overall improved results in fiscal 2016. This is backed by record first-quarter 2016 results wherein each business segment reported robust year-over-year improvement. Sonoco, thus, reiterated its earnings per share guidance in the range of $2.64–$2.74. Compared to prior-year results, the guidance’s mid-point depicts a 7% rise.

Sonoco remains committed to its ‘Grow and Optimize’ strategy, which is focused on targeted growth of its Consumer Packaging and Protective Solutions businesses and optimization of its Industrial-focused businesses. The company will also launch several innovative products in 2016, as it continues to work closely with customers through its i6 Innovation Process, utilizing the full capability of the recently opened IPS Studio in Hartsville.

Further, Sonoco has capital growth projects in the pipeline through 2017 that will help expand its global-production capability in composite cans, flexible packaging and rigid plastic containers. Sonoco has acquired a majority interest in Graffo Paranaense de Embalagens S/A (Graffo), a closely held flexible packaging business located in Brazil. Given Graffo's strong technical capabilities and established relationships with both large global consumer product companies and growing local companies, the company will be able to grow its business in Brazil - one of the important emerging markets.

Other Stocks to Consider

Sonoco currently retains a Zacks Rank #3 (Hold). Some better-ranked stocks in the same sector include Berry Plastics Group, Inc. (NYSE:BERY) , Apogee Enterprises, Inc. (NASDAQ:APOG) and Greif, Inc. (NYSE:GEF) . All of these stocks carry a Zacks Rank #2 (Buy).