Packaging manufacturer hits new high thanks to our online-shopping addiction

The aptly-named Packaging Corp. of America is one of the top performers in the S&P 500 on Wednesday, up as much as 6.8% and on track for its biggest gain in over a year.

The castellans of corrugated boxes reported better-than-expected sales and earnings for the third quarter while offering guidance for the final quarter of 2024 that was better than what analysts had penciled in.

It’s now the best-performing materials stock in the S&P 500 with a gain of more than 40% year-to-date, narrowly edging out gold miner Newmont Corp.

The continued success for the box-maker sends a reassuring signal about the American consumer, where there’s been off-and-on worries about the outlook for spending in light of some sporadic concerns about how the job market is doing. In particular, executive vice president of corrugated products Thomas Hassfurther highlighted online shopping as a source of strength.

“I’ve mentioned many times that we have a lot of e-commerce customers and that a lot of our customers got into e-com a number of years ago,” he said. “That segment continues to grow nicely, and that’s evidenced by anything you see out there data-wise regarding big-box stores and some of this other stuff, and so, a lot of online shopping.”

Nondurables are more in demand than durable goods, Hassenfurther said, a legacy of the time early in the pandemic when a lot of spending on big-ticket items got pulled forward.

During a Q&A with analysts, CEO Mark Kowlzan said that investing for growth was a higher priority — and better use of cash — for the company rather than buying back its own shares. That’s another good read-through on end-user demand for, well, everything that’s put in boxes. 

“We did not expect to see the kind of growth this year that we have experienced, and we’ve been talking about building inventory all year and we’ve not yet succeeded in coming anywhere near close to where we should be,” he added.