Sunday 16 December 2018 | ShareProphets: The one stop source for breaking news, expert analysis, and podcasts on fast-moving AIM and LSE listed shares
Regular readers will know I like a bit of geek chic in my investment choices and the surprising rise in importance of the packaging sector as both part of the structural rise of the e-commerce sector and as a way for fast moving consumer goods (FMCG) names to differentiate their offering in a competitive world, may have surprised a few people. It certainly has excited me over recent years and a year ago - as I noted here - DS Smith (SMDS) was riding high. The 2018 35%+ share price fall however is striking…
I loved up DS Smith (SMDS)'s trading update just over a month ago and the formal half year numbers see a continuation of my enthusiasm. You cannot quibble with 5% organic growth, a 7% rise in the interim dividend, an 'excellent' bedding down of the new US expansion and it has even thrown a new cheeky deal in to show the continued scope for European expansion. In the world of packaging, paper and plastics I cannot offer you corporate violence and huge fluctuating excitements but I can offer you a decent growth-at-a-reasonable-price company.
A busy corporate update Tuesday and three sets of comments stand out for me.
Fans of The Graduate will recognise the form, if not the precise wording of the title. Life has thankfully moved on from the 1960s and in today’s world of internet delivery and crowded consumer choice, packaging matters from both a practical and differentiating perspective.
Almost as much fun as voting in the referendum earlier today was reading the DS Smith (SMDS) full-year update. Having admitted to a corrugated packaging investment fetish by naming the stock as one of my preferred plays for 2016 in late December when I hear the company mumbling comments like ‘packaging is the new advertising’ or talking about ‘it is not just about a brown box’ or even ‘we lead in digital printing’ excites me.
Back at the turn of the year I chose DS Smith (SMDS) as my second share tip of the year noting that the corrugated board and packaging company was:
Unless you want to stop the conversation dead one tip for a smooth running social gathering event is never to mention corrugated board or packaging. Nevertheless in the ever more consumer convenience world we all live in such products become intimately aligned with ecommerce and retailer brand differentiator trends and that’s why corrugated board and packaging are growing faster than underlying GDP.
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