Jefferies says these 3 paper and packaging stocks can be bought during the Iran war period

Investing.com – Jefferies has identified some buying opportunities in the paper and packaging sectors amid recent market volatility. Since the outbreak of the Iran war, this sector has declined by 14%, and global energy prices are expected to remain elevated due to damage to energy infrastructure. Although inflation concerns may pressure consumer demand and sector profit margins, Jefferies believes certain stocks offer attractive entry points.

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1. Amcor (AMCR)

Jefferies believes that Amcor has been oversold. According to Resintel, about 15% of global polyethylene capacity is located in the Middle East, and shipping disruptions are driving up prices. Resin producers have announced price increases of up to $0.25 (13%) for polyethylene in March and April, while polypropylene producers have announced increases of up to $0.14 (13%). Amcor typically holds about 60 days of resin inventory, and net gains and losses lag by about 30 to 45 days before cost pass-through. This could compress margins in the fourth quarter of fiscal year 2026, but they should normalize by the first quarter of fiscal year 2027. If the announced price increases are fully realized, the company may face an operational funding headwind of about $100 million. However, with Amcor’s scale and global sourcing capabilities, the company is well-positioned to gain market share from smaller competitors. The stock currently has a free cash flow yield of 10.8% and a dividend yield of 6.6% for fiscal year 2027.

Amcor reported an adjusted earnings per share of $0.86 for the second quarter of fiscal year 2026, exceeding analyst expectations, but revenue of $5.4 billion was slightly below projections. After the earnings release, Truist Securities reaffirmed its buy rating on the company.

2. Crown Holdings (CCK)

Jefferies believes Crown Holdings has the ability to navigate the current market conditions. Despite potential supply chain disruptions in the energy and metals markets in India and the Middle East, the company’s global sourcing capabilities have kept the disruptions manageable so far. Higher aluminum, freight, and energy prices in Europe can be passed through in real-time or managed through hedging trades. Energy costs account for 2% to 5% of Americas sales costs, passed through with a one-year lag via the producer price index, while Asian contracts reset annually. Historically, beverage can sales in North America and Europe have remained flat to positive during periods of inflation or recession. The stock has dropped 12% to 13% since the outbreak of the war and is currently trading at approximately a 20% discount to historical valuations.

Crown Holdings announced a 35% increase in its quarterly dividend to $0.35 per share and appointed Dr. John M. Rost as the new Chief Operating Officer for its Asia-Pacific and Transport Packaging businesses. Analyst ratings on the company are mixed, with UBS downgrading its rating to neutral, while RBC Capital Markets raised its target price.

3. Ball Corporation (BALL)

Similar to Crown Holdings, Ball Corporation benefits from global sourcing capabilities that limit supply chain disruptions. The company employs the same pass-through and hedging strategies to manage higher input costs. Nielsen data shows steady growth in North American beverage cans, particularly for carbonated soft drinks and energy drinks. The stock has dropped 12% to 13% since the outbreak of the war, trading at a 20% discount to historical valuations, which Jefferies believes provides an attractive entry point for this defensive quality company.

In a recent update, Ball Corporation reported an operating earnings per share of $0.91 for the fourth quarter, with revenue of $3.35 billion, both exceeding analyst forecasts. This performance was driven by a 6% year-over-year increase in beverage can sales, prompting several firms, including RBC Capital Markets and Truist Securities, to raise their target prices on the company.

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