5 reasons Amcor Ltd could be the blue-chip stock to power your returns

Global packaging leader keeps on growing, making Asian acquisitions.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Many times the "best of breed" market leaders can be good long-term winners for investment returns. They have growing established businesses with highly experienced management teams. One of these companies is Amcor Limited (ASX: AMC), the leading packaging company in Australia.

It de-merged from Orora Ltd (ASX: ORA), a smaller Australian packaging producer that also operates a packaging distribution business in North America, in December 2013. However, it is still on the road of expansion overseas.

Here are five reasons why Amcor could be a steady earner for your portfolio over the years.

1) Market leader in packaging

The $12.7 billion company is the leading maker of packaging for food, household items, beverages, tobacco products and medical products. Due to the daily packaging needs of all kinds of companies, the products are always in demand.

This is the type of company that investor Warren Buffett would love because of the constant need to replace the product sold, like disposable razors.

2) Share price growth and dividend

In the past 12 months its share price is up about 18%, beating the 11% rise of the S&P ASX All Ordinaries Index (ASX: ^AORD). It set a new all-time high of $10.89 in February and is working its way back up to that price. Currently it's $10.66 and offers a dividend yield of 3.8% unfranked.

3) History of steady earnings growth

Since 2007, it has raised underlying net profit every year and dividends have been stable. Over the next year or two some analysts are forecasting earnings and dividends to rise by about 10% annually.

4) Asian expansion

Over the last year the company has made several acquisitions in Asia to expand its footprint in that growing economic market. With three of the world's top five most populated countries in the region, there is great potential for long-term growth.

5) Improving returns performance

Not only is it growing revenue and earnings, but financial performance is improving such as a higher return on equity and operating margins. It is able to squeeze more profit out of the operations because of its large scale and efficient management.

Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »