Truist has reiterated Buy ratings on Packaging Corporation of America (NYSE: PKG) and Sonoco Products (NYSE: SON), designating both stocks as its best ideas on the grounds that pricing power, integration synergies and productivity gains should help offset rising costs.
Packaging Corporation of America
Truist describes Packaging Corporation as the best-in-class producer in its sector, citing a steady operating record and an attractive return profile. The firm noted Packaging Corporation's acquisition last year of the GEF containerboard business, which added capacity to an already highly utilized system and created growth optionality for the coming years. Truist expects the deal to deliver upside relative to the original $60 million synergy target.
Packaging Corporation recently raised its dividend by 20%.
On demand and pricing, Truist noted favorable trends. Packaging is targeting low-single-digit percentage year-over-year volume growth in the second quarter. The broker also highlighted that roughly 10% of U.S. containerboard industry supply was taken offline last year. Prices have risen a net $50 per ton in 2026, which Truist says has helped offset higher input costs, and producers have announced an additional $50 per ton increase for June.
Truist quantifies the impact of price moves for North American producers: each $50 per ton price increase translates to about $290 million in incremental annualized EBITDA and roughly $2.45 in earnings per share for Packaging Corporation.
Sonoco Products
Sonoco was selected as a best idea because of its pricing power and ongoing self-help measures aimed at improving margins. The company guided to year-over-year earnings growth in the second quarter despite an estimated net inflation headwind of $8 million to $10 million, driven mainly by higher energy, freight and other petrochemical costs.
Truist noted that uncoated recycled boxboard (URB) prices rose $60 per ton in April, and that Sonoco measures incremental EBITDA at roughly $6 million for every $10 per ton of pricing - implying $36 million from the April move. Sonoco also announced another $60 per ton price increase effective July 8.
Truist added that Sonoco is progressing on a $150 million to $200 million margin improvement program targeted for 2028. That initiative includes the remaining roughly $60 million of Eviosys synergies, plus commercial excellence and operational improvement actions. On valuation, Truist observed that Sonoco trades at 7.1 times 2027 Street EBITDA compared with a historical range of 7.5 to 8.0 times.
Key takeaways
- Truist names PKG and SON as top ideas, maintaining Buy ratings based on pricing power, synergies and productivity.
- Packaging Corporation's acquisition of the GEF containerboard business adds capacity and may exceed the original $60 million synergy estimate; recent pricing gains and supply closures support margins.
- Sonoco is pursuing $150 million to $200 million of margin improvement by 2028, including Eviosys synergies, and has implemented multiple price increases that are expected to contribute incremental EBITDA.
Risks and uncertainties
- Ongoing input cost pressure - higher energy, freight and petrochemical costs could continue to weigh on margins if pricing or productivity measures are insufficient.
- Execution risk on synergies and margin programs - the realization of the expected GEF synergies for Packaging Corporation and the remaining Eviosys synergies for Sonoco is subject to successful integration and operational execution.
- Volume and demand sensitivity - while demand trends are described as favorable, future volume outcomes could diverge from current targets, affecting revenue and margin trajectories.
This article reports Truist's views and the companies' cited figures and guidance as presented by the firm.