Shares of Berry Plastics Group, Inc. BERY, the manufacturer of value-added plastic consumer packaging and engineered materials, hit a new 52-week high of $37.33 on Dec 4, eventually closing a notch lower at $37.21. The new high is due to expected benefits from potential acquisitions.
Berry Plastics has a market cap of $4.5 billion. The company has returned roughly 23.7% in one year and 18% year-to-date. Despite its strong price appreciation, this Zacks Rank #1 (Strong Buy) stock still has the wherewithal to drive its price further upward. The stock is currently trading at a forward P/E of 16.5x and has long-term earnings growth expectation of 20%.
What is Driving Berry Plastics?
Acquisitions and geographic expansion are expected to assist growth in fiscal 2016 and beyond. The company will continue to invest in industry-leading technologies to create differentiated products. Moreover, capacity reductions necessitated by the recent dynamics of the North American food industry will drive growth.
Notably, in October, Berry Plastics acquired 100% of the capital stock of AVINTIV, Inc., one of the world’s leading developers, producers, and marketers of nonwoven specialty materials used in hygiene, infection prevention, personal care, and high-performance solutions. The integration of AVINTIV will help Berry Plastics to maximize its capability.
The integration of AVINTIV will organize Berry Plastics into three divisions. These divisions will be Health, Hygiene and Specialties or HHS, Consumer Packaging and Engineered Materials. The new HH&S division will serve Berry Plastics’ industry segments of hygiene, personal care, medical and pharmaceutical products.
Berry Plastics remains excited about its acquisitions and the benefits from the combination of businesses. The company expects to achieve the original cost synergy estimates of $50 million, with anticipation of $30 million being realized in fiscal 2016.
Continued focus on driving organic and international growth, coupled with cost reduction actions, paves the way for Berry Plastics’ future prospects. Going forward, Berry Plastics will remain focused on its key strategic initiatives to persistently drive shareholder value.
Other Stocks to Consider
Other stocks in the same industry worth considering include Albany International Corp. AIN, Brady Corp. BRC and Codexis, Inc. CDXS. All these stocks carry a Zacks Rank #1 (Strong Buy).
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