We came across a bullish thesis on Graphic Packaging Holding Company on Chop Wood, Carry Water’s Substack by Alexandru Dragut. In this article, we will summarize the bulls’ thesis on GPK. Graphic Packaging Holding Company’s share was trading at $12.10 as of February 23rd. GPK’s trailing and forward P/E were 10.99 and 8.85 respectively according to Yahoo Finance.
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Graphic Packaging Holding Co. (GPK) is a leading provider of paper-based consumer packaging, producing the boxes, cups, trays, and cartons found in everyday products from cereal to coffee and quick-service meals. Despite recent market skepticism, GPK’s underlying business generates approximately $700 million in annual owner earnings, reflecting a 19% yield on current market capitalization.
The apparent weakness is largely due to three temporary headwinds: the ramp-up of the company’s largest-ever capital investment at the Waco, Texas facility, unusual pricing pressure from overcapacity in bleached board competitors, and broader softness in consumer packaged goods (CPG) volumes. These factors mask the resilience of GPK’s core business, which serves diversified, high-quality customers, including General Mills, Coca-Cola, Procter & Gamble, and leading quick-service restaurants, with no single customer representing more than 10% of sales.
GPK’s North American folding carton operations command roughly 40% market share, while European operations are expanding via the AR Packaging acquisition. The company’s vertical integration—internal production of recycled paperboard—and modernized facilities like Kalamazoo K2 and Waco provide a durable cost advantage, while innovation initiatives such as KeelClip™, Boardio™, and PaperSeal™ position GPK to capture a $15 billion plastic-to-fiber conversion opportunity. Multi-year supply contracts, operational integration, and proprietary formats create a contract-cycle-bound moat. Free cash flow is set to normalize in 2026 at $700–800 million as CapEx drops post-Waco, enabling debt reduction and potential value compounding.
While risks exist, including execution by the new CEO, ongoing bleached board overcapacity, and potential CPG volume softness, GPK’s diversified customer base, low cyclicality, and strategic investments offer a compelling margin of safety. At current prices, the market appears to underappreciate the company’s normalized earnings and cash flow trajectory, creating a potential opportunity for significant upside.
Previously, we covered a bullish thesis on Avery Dennison Corporation (AVY) by Serhio MaxDividends in May 2025, which highlighted the company’s diversified materials portfolio, operational efficiency, segment growth, and reliable dividends. AVY’s stock price has appreciated by approximately 6.87% since our coverage. Alexandru Dragut shares a similar view but emphasizes Graphic Packaging Holding Company’s (GPK) vertical integration, capital ramp, and contract-cycle moat driving normalized free cash flow.
Graphic Packaging Holding Company is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 48 hedge fund portfolios held GPK at the end of the third quarter which was 37 in the previous quarter. While we acknowledge the risk and potential of GPK as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than GPK and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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Disclosure: None.
