Just because a stock's gone up, doesn't mean you shouldn't consider buying it.
In fact, a company Real Money Columnist Paul Price liked very much six weeks ago, appears to be giving investors another chance.
Berry Global Group (BERY) makes plastic packaging and related products. They don’t make the stuff you buy. They make the stuff that the stuff you buy goes into.
Just about everyone needs what Berry Global Group is selling. Somehow, writes Paul Price, the market at large hasn’t quite caught on to this yet.
“Berry Global Group (BERY) posted another fine profit gain in its fiscal year 2022 first quarter ended Dec. 31," Price wrote recently. "Adjusted earnings per share matched Value Line's estimate at $1.25 versus $1.12 a year earlier and just $0.55 in December 2019."
In addition, "two key takeaways were the reaffirmed guidance of $7.20 - $7.70 for the fiscal year ending Sept. 30 and a $1 billion additional share price buyback authorization.”
This, Price writes, puts even the lowest end of BERY’s projected profits far beyond the company’s 2021 records… by a lot. For investors who got in earlier, that’s great news. They’ve enjoyed quite the ride.
But, Price argues, the opportunities in this company aren’t over. The market continues to undervalue this growth stock.
“Berry has shown stellar growth since the end of 2013. At management's mid-point guidance, EPS will have surged by almost 800% in just nine years. Continuous shareholders were up greater than 260% over that span. Even so, Berry's present valuation, at about 9 times this year's profits compares with a more typical multiple of 15 times or so."
In fact, "even $7.20, the low end of the range for fiscal year 2022 would represent 24.1% annual growth. Where can you find another proven growth stock like that at a single-digit valuation?”
When Price wrote about the stock, before the Russian invasion of Ukraine, Berry Global Group traded for less than $62 per share. With the subsequent volatility, it's now at $59.19.
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