Sonoco Products Company (SON): A Bull Case Theory

We came across a bullish thesis on Sonoco Products Company on Valueinvestorsclub.com by  diamond123. In this article, we will summarize the bulls’ thesis on SON. Sonoco Products Company’s share was trading at $42.62 as of October 8th. SON’s trailing and forward P/E were 45.83 and 6.53 respectively according to Yahoo Finance.

Sonoco (SON) is a well-established packaging and paper company that has strategically transformed its asset base through targeted acquisitions and divestitures, creating a more streamlined “New Sonoco” that will report its first full year of results in 2026. The company now operates three core business units compared with over 20 previously, generating stable, cash-rich operations with modest cyclicality. The consumer segment, which accounts for roughly two-thirds of 2026 revenue, manufactures metal food cans, aerosol cans, and rigid paper containers (RPC), including high-growth RPC like Pringles cans, supported by long-term, often exclusive, contracts with major multinational clients.

The industrial segment, comprising the remaining revenue, produces paper cores, protective packaging, and uncoated recycled boxboard (URB), and while slower-growing, it is more exposed to cyclical swings in commodity costs and demand. Sonoco has leveraged scale advantages in metal packaging, including cost savings from bulk steel procurement, and maintains a leading global position in RPC with limited scaled competitors, supporting pricing power and customer stickiness. Management, led by CEO Howard Coker, emphasizes continuity and operational expertise, while the recently appointed CFO brings additional public company experience.

The company currently carries elevated leverage following transformative acquisitions, but the sale of ThermoSafe and strong free cash flow generation should reduce debt to the low 3x range by 2026. Trading at 8.4x 2026 free cash flow, Sonoco is at historical and sector lows, offering potential upside to ~12x FCF, or higher if execution and organic growth outperform. Catalysts include clearer financial reporting, investor adaptation to the new business mix, and a forthcoming Capital Markets Day, which should provide further visibility on long-term strategic objectives and reinforce confidence in the company’s cash-generative, structurally advantaged business model.

Previously we covered a bullish thesis on Avery Dennison Corporation (AVY) by Serhio MaxDividends in May 2025, which highlighted the company’s leadership in materials science, operational efficiency, solid segment growth, and consistent dividend increases. The company’s stock price has appreciated approximately by 12% since our coverage. The thesis still stands as AVY continues to innovate in intelligent labels. Diamond123 shares a similar perspective but emphasizes Sonoco’s streamlined, cash-generative packaging business and upside from leverage reduction.

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Disclosure: None.