Wednesday's IBD 50 Stocks To Watch pick — Graphic Packaging — is one of the top stocks to buy and watch in the ongoing stock market volatility. GPK stock is just below its latest buy point amid Wednesday's fractional midday loss.
Stocks To Buy And Watch: Graphic Packaging
Founded in 1991, Atlanta-based Graphic Packaging is a leading provider of sustainable paper-based packaging solutions for food, beverage, food service and other consumer product companies.
In addition to U.K.-based food and personal products giant Unilever, its client roster features many of the world's most widely recognized companies and brands, including PepsiCo, Altria, General Mills and Nestle.
In the second quarter, Graphic Packaging reported earnings per share surged 131% to 60 cents, and sales climbed 36% to $2.35 billion vs. the year-ago period. The earnings report on July 26 sent shares up 4.5%.
In late July, Unilever announced the launch of its most sustainable laundry capsule yet. The new product represents the fastest growing detergent format in many parts of the world.
The innovative box, designed in partnership with Graphic Packaging International, is built to lock out moisture even more effectively than current plastic packaging to prevent capsules from sticking together. It's also easier to open and close, yet it's also child-safe and fully recyclable.
IBD Stock Ratings
GPK stock shows a strong 98 out of 99 Earnings Per Share Rating, with strong EPS gains in the most recent two quarters.
Graphic Packing also has a solid SMR grade of B, according to IBD Stock Checkup. The SMR Rating analyzes a company's sales, margins and return on equity, and offers a letter grade from A (the best) to E (the worst).
In 2021, pretax margins and return on equity measured 6% and 21%, respectively. Meanwhile, sales growth averaged 30% over the last three quarters.
The stock has a strong 98 out of a perfect 99 IBD Composite Rating, ranking among the top stocks within the paper and paper products industry group.
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GPK Stock Tops Buy Point
Following an Aug. 10 breakout beyond a cup-with-handle's 23.09 buy point, Graphic Packaging shares are faltering amid recent stock market weakness. On Monday, the stock ended in the 5% buy area that goes up to 24.24. But the stock gave up those gains during Tuesday's stock market dive, falling nearly 3%, according to IBD MarketSmith pattern recognition.
Wait for a decisive move back above the entry before deciding whether to purchase shares.
In recent weeks, the stock found solid support at its key 50-day moving average line, which is a pivotal level to watch.
Another factor to watch is the stock's relative strength line. It hit a new high this week, which is a bullish signal. That means the stock is strongly outperforming the major stock indexes during the current market turbulence.
Following its July breakout, Graphic Packaging is one of the top stocks to buy and watch if the market is able to stabilize and rebound.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on top stocks to buy and watch and the stock market.
