Amcor (AMC) might not be anybody’s idea of an exciting stock, but after many years of flat-to-no sales growth we are finally seeing an improvement…


…which is translating into higher earnings.


…and that flows through to forecast eps estimates as well.

It has great free cashflows, for a business that is capital intensive (normally capex heavy business have rubbish returns, and worse fcf).


Margins suggest reasonable pricing power, given the inflationary backdrop.


At a fairly modest valuation.

Not the cheapest, in the sector, but many of the other materials names are over-earning, and you’ve got to be pretty spot on at your war-gaming/scenario analysis as to what premia are priced in, and for how long, across your various commodities.


Now I would not want anyone to think they are immune, from high raw material prices. The stocks recent share price weakness is likely a function over exactly these kinds of concern (polyethylene terephthalate [PET] is hydrocarbons, cans are aluminium, both of which are at sky-high prices), as well as EU exposure given the war.

Momentum is one of the most reliable/powerful/enduring of the factor premia. Most of the time, in a disagreement with the market, one should favour the market.

However, it is a QGARP company, which makes it interesting to us.

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