Workers move cardboard shipping boxes at Amazon's fulfillment center in Swindon, Wiltshire, as they prepare for orders ahead of Black Friday on November 24 (Ben Birchall/Getty Images)

Hot box

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

Shares of Packaging Corp. of America are surging after the company reported better-than-expected sales and profits, with management highlighting e-commerce as a key growth channel.

Luke Kawa

10/23/24 1:29PM

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.

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AI server cluster maker Penguin Solutions takes flight

Small-cap AI server cluster maker Penguin Solutions surged Thursday after posting better-than-expected Q2 revenue and profit numbers Wednesday after the close, along with an increase in full-year sales and profit guidance.

The company, which was known as Smart Global Holdings until July 2024, has positioned itself as a provider of “end-to-end AI infrastructure solutions.”

Its Advanced Computing division designs and sells computers, cabling, and cooling systems, the server racks and clusters of racks AI data centers need. Its other main division sells flash and DRAM memory products.

It’s a pretty small company, with a fully diluted market cap of just over $1 billion and roughly 2,900 employees, according to FactSet.

The stock is volatile. Penguin dove during last year’s tariff tantrum that followed “Liberation Day” in April. Then it turned tail and doubled through early October amid a surge of call options activity, which tends to reflect retail interest. From the October peak, it then plunged by about 50%, before Thursday’s renaissance.

For what it’s worth, call options activity in Penguin is pretty busy today, too — relatively speaking — with roughly 2,625 traded as of 1:15 p.m. ET. That’s the most since early January, when the company last reported quarterly numbers. The average volume over the previous 25 trading sessions is about 325 calls a day, FactSet data shows.

Penguin Solutions Stock Takes Off On AI Bolstered Outlook

The company, which was known as Smart Global Holdings until July 2024, has positioned itself as a provider of “end-to-end AI infrastructure solutions.”

It’s a pretty small company, with a fully diluted market cap of just over $1 billion and roughly 2,900 employees, according to FactSet.

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Momentum returns to optics stocks as the release valve for AI optimism

Potentially imminent end to the war? Buy optics stocks.

Maybe not? Buy optics stocks anyway.

Effectively all the juice left in the AI trade is coming from optics (and memory) stocks. And the latter group is taking a bit of a breather today while the former continues to surge.

Shares of Ciena Corp., Lumentum, and Coherent are building on recent big gains and among the biggest gainers in the S&P 500 near midday, while Applied Optoelectronics is also surging on Thursday.

These companies all provide solutions that help information move around in data centers, and thus are key beneficiaries of the aggressive capex plans of hyperscalers. Nvidia has invested $2 billion apiece in Coherent and Lumentum in deals that also include purchase commitments.

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Space stocks rip during a topsy-turvy day for the equity market

Satellite-services-from-space stocks surged Thursday after reports that Amazon is in talks to buy Globalstar, which provides voice and connectivity services from its satellite network. It also can’t hurt that the general mood around space is ebullient, following the successful launch of Artemis II on Thursday.

Planet Labs and ViaSat also soared on the news.

The gains for EchoStar — seen as a backdoor play at pre-IPO SpaceX exposure — and Rocket Lab were more muted, perhaps because a deep-pocketed competitor like Jeff Bezos getting serious about space services could complicate the plans of the two largest commercial space launch companies.

Rocket Lab and SpaceX see launch services as key to their aspirations of being major providers of voice and data services from low-Earth orbit satellites.

Tesla CEO Elon Musk’s SpaceX is the dominant provider of such services, and the early rumors on the company’s planned IPO — expected to be the largest ever — suggest the market is very excited about the prospects for the industry.

Elsewhere in the space stock world, Intuitive Machines — a maker of space infrastructure that provides services to NASA for lunar missions — also rose.

Globalstar surges after FT reports that Amazon is in talks to buy the satellite group

Rocket Lab and SpaceX see launch services as key to their aspirations of being major providers of voice and data services from low-Earth orbit satellites.

Elsewhere in the space stock world, Intuitive Machines — a maker of space infrastructure that provides services to NASA for lunar missions — also rose.

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