Graphic Packaging, an IBD 50 growth stock, is trying to break out of a long consolidation with a buy point of 24.17.
Shares climbed past their buy point with strong volume on Tuesday and hit a 52-week high. They pulled back Wednesday and are testing their 10-day moving average.
GPK is today's selection for IBD 50 Stocks to Watch. The growth stock has a stellar Composite Rating of 98 and a Relative Strength Rating of 82. A score above 80 shows technical strength.
The company's sales growth has been improving the past several quarters, and earnings over the past four quarters ranged from 11% to 108%. In the third quarter, sales grew 38% to $2.4 billion from the previous year, while earnings grew 79% to 61 cents a share.
The impressive track record has given the stock a top-notch EPS Rating of 98. The company also announced in September a 33% increase in its quarterly dividend to 10 cents a share that was paid Jan. 5. It also bought back $15 million worth of stock. Share buybacks and dividends amounted to $38 million for the quarter.
The company has scheduled its fourth quarter earnings announcement for Feb 7. Analysts expect earnings of 58 cents a share, an increase of 86%, on sales of $2.325 billion, up 17%.
Growth Stock Shows Strong Product Suite
Graphic Packaging makes packaging products like cartons, paper cups and trays. Besides standard folding cartons and multipacks, the packing company also offers strength packaging with more compressed strength.
It can be called an innovator in the industry. Its hybrid packaging combining paperboard and flexible materials can be found on any store shelf. Its enhanced packaging involving inks and coatings that make the packaging more attractive, or resilient to wear and tear.
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Graphic Packaging also makes multipack machinery systems for beverages and other products. Several industries including food services, health care, pharmaceuticals, personal and pet care use its products.
The company has 130 locations across the U.S., Australia, the U.K., Indonesia and Europe. It also operates five innovation centers for advanced technologies and new designs and materials.
The growth stock stands first in the paper and paper products group. The group itself lags in 113th place among IBD's 197 industry groups. The Atlanta, Ga.-based company acquired AR Packaging, a leading packaging company in Europe, in November 2021.
The $1.5 billion acquisition expanded GPK's footprint to Eastern and Central Europe and Scandinavia. Graphic Packaging made several other acquisitions in the U.S. before, including Americraft Carton for $280 million.
Mutual funds own 62% of the growth stock. Fund ownership has been increasing over the past three quarters as well. The Invesco DWA Industrials Momentum ETF and the First Trust Industrials/Producer Durables AlphaDEX Fund ETF hold shares of Graphic Packaging.
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