On Friday, Sonoco announced
an across-the-board price hike on "all grades of uncoated recycled
paperboard (URB) products by $40 per ton, effective with shipments in
the United States and Canada beginning July 8, 2013." The company's
Primary Materials Group, North America, Vice President Marty
Pignone explained that "the price increase is necessary to recover
rising recovered paper and other raw materials costs."
Posted prices for old corrugated containers (used cardboard boxes) are said to be up 60% over the past nine months, and some of this recyclable material is selling above even these higher posted prices. Demand for the raw material, as you can imagine, is strong.
Despite the reported cost increases, however, Sonoco's gross margins have held up well over the past three quarters, averaging 50 basis points better (17.5%) than what the company earned in the previous three quarters (17%).
Time to invest like it’s 2008? A handful of PROs think so...
When the market dropped 50% in 2008 and 2009, this group was never down more than 5%. And yet they've made over 11% a year since then (matching the market’s spectacular run -- and that’s with hedges and shorts in place!)
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Posted prices for old corrugated containers (used cardboard boxes) are said to be up 60% over the past nine months, and some of this recyclable material is selling above even these higher posted prices. Demand for the raw material, as you can imagine, is strong.
Despite the reported cost increases, however, Sonoco's gross margins have held up well over the past three quarters, averaging 50 basis points better (17.5%) than what the company earned in the previous three quarters (17%).
When the market dropped 50% in 2008 and 2009, this group was never down more than 5%. And yet they've made over 11% a year since then (matching the market’s spectacular run -- and that’s with hedges and shorts in place!)
Read More