Buybacks Boost Package Play

07/24/2014 7:00 am EST


David Fried

Editor, The Buyback Letter

Our Buyback Premium Portfolio is beating the S&P 500 by more than 107% since its inception 2000; here’s a look at the latest addition to this portfolio, notes David Fried, editor The Buyback Letter.

We last bought Graphic Packaging Holding Company (GPK) in January and sold it in June for a tidy 21% gain. It has floated to the top of our filters again.

GPK is a leading provider of packaging for a variety of products to food, beverage, and other consumer products companies. 

It is one of the largest producers of folding cartons and holds a leading market position in coated-unbleached kraft, coated-recycled boxboard, and specialty packaging.

Customers include some of the most widely recognized companies in the world, including Kraft Foods, MillerCoors, Anheuser-Busch, General Mills, and various Coca-Cola and Pepsi bottlers.

The company is selling its bags and kraft paper business to Mondi Group for $105 million in cash, and has acquired Benson Group, which is a leading food and healthcare packaging company in the UK.

The combination of businesses is expected to enhance GPK’s folding carton business in Europe, with sales of more than $700 million.

The company had EPS growth of 36.8% last year, and analysts think it looks good for this year as well, with a current estimate of 25.5% EPS growth.

In addition, it ranks high among analysts’ top picks with strong buyback activity. GPK has reduced shares outstanding by 6.08% in the past 12 months.

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