Have a Ball Corp.

Could shares be due for a bounce? Wall Street Connected Profit Like The Pros Brought to you by: A penny for your thoughts? - That guy in the office Dear subscriber, Hipsters love to take Ball (BLL) jars and turn them into drinkware. Cut your beard and take your suspenders out of here! And apparently, so do institutional advisors. Or at least our TrackstarIQ data indicates they’re interested in the stock. With shares off more than 13% from their recent highs, we thought it was high time to look into this worldwide conglomerate. More than mason jars Funny enough, Ball actually doesn’t make those mason jars anymore. They’re produced by Newell Rubbermaid and have been since the early 1990s (under a license). Actually, Ball Corp. is one of the world’s largest suppliers of metal packaging to the beverage, personal care, and household products industry. Chances are that the last beer or soda you drank came in a Ball can. Their revenues breakdown as follows: - North & Central America Beverage - 44% - South America Beverage - 15% - EMEA Beverage - 26% - Aerospace - 15% The aerospace division makes aerospace and related products to defense, civil, and commercial sectors. The good, the bad, and the ugly Initially, people stuck in their homes benefited Ball. Demand for beverage cans soared, with the most recent quarter’s revenues up 12.21% vs the prior year. The 5-year average revenue growth is around 8%. Operating margins continued to improve climbing from 10.2% in 2019 to 10.7% last year. Here’s the thing. Ball isn’t exactly cheap. Shares trade at a 35.88x price-to-earnings (P/E) ratio compared to the industry average of 30.28x. To give some perspective, Ball’s 5-year average P/E runs at 43.22x compared to the industry average 24.74x. A look into the near future Demand for their products far outstrips supply. And Ball can’t keep up with demand. Heavy investments in new plants should pay off in the next couple of years. However, the supply/demand imbalance has forced them to import cans to meet demand. That’s bound to put pressure on margins until their three new plants come online in North America. Plus, aluminum reached prices not seen since 2018. So either Ball eats the cost or the consumer does. The other main concern is the reopening of the economy. Investors wonder whether consumption shifts away from at-home can consumption to fountain drinks and the like at restaurants, dampening demand in the coming quarters. Lastly, their balance sheet isn’t great. In a nutshell, they have a lot of debt. However, they operate in a fairly stable business that isn’t undergoing any systematic shifts. Our hot take The 0.73% dividend yield isn’t enticing enough to overcome the frothiness in the stock. Markets priced in tailwinds and no headwinds, leading to more downside risk than anything. Given its history, BLL is an overpriced stock that will remain overpriced. Sponsored [Battery power is the future… this company makes it safer]( Lithium-ion batteries are the future. But with every new technology, there are issues. This company is a pioneer in thermal management technology. Its products will be essential in the development of batteries as a primary energy source. [Read more.]( What we’re watching [Wall Street Connected: ViacomCBS]( Today we’re taking a look at a global media and entertainment conglomerate… ViacomCBS. The New York based media giant focuses on creating premium content and operates through various brands, including CBS, and Paramount Pictures. [Watch Now]( OUR RECENT POSTS [A cheap stock at all-time highs?]( One automotive company looks darn good [Read more]( [FinVolution is ridiculously cheap]( But is it worth it? [Read more]( - The Editorial Staff # [submit to reddit]( [submit to reddit]( [submit to reddit]( To ensure delivery of all emails, [whitelist us](. Update your email preferences or unsubscribe [here](#). View our privacy policy [here](#). Copyright ©2021 InvestingChannel. All rights reserved. 1325 Avenue of the Americas, Floor 27 & 28 New York, New York 10019 Disclaimer: This is not investment advice. This InvestingChannel, Inc. newsletter is for information purposes only and opinion-based. Futures, forex, stock, and options trading are not appropriate for all investors. There is a substantial risk of loss associated with trading these markets. Losses can and will occur. No system or methodology has ever been developed that can ensure returns or against losses. No representation or implication is being made that using any of these methodologies or systems will generate returns or ensure against losses. Investors should be cautious about any and all investments and are advised to conduct their own due diligence prior to making any investment decisions. [Link](