Paper & Plastic Packaging Industry Set To Grow: 3 Top Picks

Zacks Investment Research | Jan 13, 2019 08:59PM ET

The Zacks Containers - Paper And Packaging industry is likely to continue on growth trajectory on the back of favorable consumer spending, strong labor market, rising government expenditures and increased consumer confidence. Further, rapid urbanization and rising purchasing power in Asia, particularly China, India, and Southeast Asia will sustain demand for packaging going forward.

Consumer End Markets, Innovation to Sustain Growth

The industry includes companies which manufacture paper and plastic-based packaging products. It caters to a wide variety of markets including food, beverage, foodservice, consumer products, chemical, agribusiness, medical, pharmaceutical, electronics and industrial markets. Notably, demand in the Containers - Paper And Packaging industry is usually fairly stable across economic cycles, owing to its high exposure (more than 60%) to stable consumer-oriented end-markets, such as food and beverages and healthcare as they include essentials utilized in day-to-day lives. This ensures stability, steady growth and earnings for the industry.

Demand for sophisticated packaging for several consumer goods and products is on the rise and the industry is constantly striving to meet this by adopting new technology and innovative products. It is also likely to gain from capitalizing on growing global demand for eco-friendly biodegradable packaging materials spurred by environmental concerns. Nowadays, packaging is not only containing and protecting the product but also includes sustainable packaging solutions to cater to increasing consumer awareness on environmental issues. Consequently, industry players will benefit from focus on maintaining quality of the package, conforming to industry-standards and ability to minimize carbon footprint.

E-commerce Boom to Spur Packaging Demand

The evolution of e-commerce has significantly impacted demand in the industry with each passing year. Packaging has gained utmost importance as it not only has to maintain the safety of the product but also be durable enough to withstand the complex automated and manual supply chains involved in delivering the product. According to Zacks Investment Research

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Written By: Zacks Investment Research

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