Right now on the TSX there are not a ton of companies that can boast about their skyrocketing stock prices. There are always a couple, but the trouble investors face is finding them, as they aren’t always oil or energy companies. In some rare cases they can even be a manufacturing company, such as CCL Industries (TSX: CCL.B).
Most people look at a company whose trade is making labels and containers for products like soap, pop, and hairspray and write the company off as unappealing. What people don’t realize about CCL Industries is that those everyday products have names like Coca-Cola, Tide, and L’Oreal, among others. What most people also fail to realize is that this is a company that has seen its stock price surge by 175% in the past two years.
The power of consolidation
On July 5, 2013, CCL Industries had a stock price of $65.28. Now fast forward to July 5, 2014, and the stock closed at $103.00. This is just a few dollars below the peak of $109.99 the stock saw last month. How much farther can the stock go? Analysts are really liking the culture of acquisitions over at CCL Industries, especially when the company opened up its wallet to pick up a pair of divisions from Avery Dennison for $500 million.
The ramifications of this deal have been drastic to its bottom line, with a 67% increase in year-over-year sales during the first quarter. Even net earnings jumped by 54% during the same period to $52.6 million, or $1.54 per share, from $34.1 million, or $1.01 per share.
Acquisitions such as these are becoming more common with CCL Industries and are very likely to continue, especially when you consider the words of its chief executive, Geoffrey Martin, who said that, “The world of labels is a very fragmented space, so we have many opportunities to acquire businesses … and will continue to be doing that.”
How much growth is left in CCL?
Due to all this growth the company has grown to a workforce of 10,000 employees working in 96 facilities throughout 27 countries.
With all of this considered, analysts see good days ahead for CCL with an average price target of $127.00. Some more bullish analysts even see the stock hitting $133.00. However, don’t forget these numbers are not set in stone, as two months ago the average price target was only $110.00. With access to growing markets in South America and China, backstopped by its North American operations, CCL Industries is poised to be a global force when it comes to labels and packaging.
