Jefferies has identified what it describes as selective buying opportunities in the paper and packaging sector as markets react to heightened geopolitical risk. The sector has declined roughly 14% since the outbreak of war in Iran, and Jefferies notes that damaged energy infrastructure is expected to keep global energy prices elevated. That environment raises the prospect of inflationary pressure that could damp consumer demand and compress margins across packaging companies, yet the firm believes particular names present attractive entry points for investors.
Below, Jefferies' rationale for three names in the sector is set out, along with operational details the firm says underlie each recommendation.
1) Amcor (AMCR)
Jefferies regards the recent sell-off in Amcor shares as more pronounced than warranted. The analyst note cites Resintel data indicating that about 15% of global polyethylene production is based in the Middle East, and that shipping disruptions in the region are contributing to resin price inflation. Resin producers have announced increases that amount to as much as 25 cents, or roughly 13%, for polyethylene across March and April; polypropylene producers have announced increases of up to 14 cents, also about 13%.
Operationally, Amcor typically carries around 60 days of resin inventory and experiences a net profit-and-loss lag of approximately 30 to 45 days before higher input costs are fully passed through. Jefferies warns this timing could translate into a margin squeeze in the fourth quarter of fiscal 2026, though the firm expects margins to normalize by the first quarter of fiscal 2027. If the announced resin price increases fully materialize, Amcor could face roughly $100 million in working capital headwinds.
Despite those near-term headwinds, Jefferies highlights Amcor's global scale and procurement capabilities as advantages that could enable the company to take share from smaller competitors. The stock is described as trading at a 10.8% fiscal 2027 free cash flow yield and offering a 6.6% dividend yield. In its most recent results, Amcor reported Q2 fiscal 2026 adjusted earnings per share of $0.86, above analyst expectations, while revenue of $5.4 billion was slightly below forecasts. Following that report, Truist Securities reiterated its Buy rating on the company.
2) Crown Holdings (CCK)
Jefferies sees Crown Holdings as relatively well-positioned to withstand current market disruptions. The firm acknowledges potential supply-chain pressure stemming from energy and metal markets in India and the Middle East, but notes that Crown's global sourcing footprint has to date kept disruptions manageable.
In Europe, higher aluminum, freight and energy costs are either passed through to customers in real time or are hedged. In the Americas, energy costs constitute roughly 2% to 5% of cost of goods sold and are passed through on a one-year lag via the Producer Price Index; Asia contracts are reset annually. Historically, beverage can volumes in North America and Europe have tended to remain flat to positive during periods of inflation or recession, a dynamic Jefferies cites in assessing Crown's resilience.
The stock has fallen approximately 12% to 13% since the start of the war and is trading at roughly a 20% discount to its historical multiples, according to Jefferies. Recent company actions include a 35% increase in the quarterly dividend to $0.35 per share and the appointment of Dr. John M. Rost as Chief Operating Officer for Asia Pacific and Transit Packaging. Analyst sentiment has been mixed: UBS downgraded the stock to Neutral while RBC Capital raised its price target.
3) Ball Corporation (BALL)
Ball Corporation, like Crown, benefits from global sourcing that has limited the impact of supply-chain disruptions to date. Jefferies points out the company's use of pass-through and hedging strategies to manage higher input costs. Nielsen data cited by the firm shows steady growth in North American beverage can volumes, with particular strength in carbonated soft drinks and energy drinks.
The stock has retreated about 12% to 13% since the conflict began and is trading at approximately a 20% discount to historical valuations, which Jefferies views as creating an attractive entry point for investors seeking defensive exposure in packaging. In a recent update, Ball reported fourth-quarter operating earnings per share of $0.91 and revenue of $3.35 billion, both above analyst forecasts. Those results were driven by a 6% year-over-year increase in beverage can volume, prompting several firms, including RBC Capital and Truist Securities, to raise price targets on the company.
Bottom line - Jefferies acknowledges short-term risks tied to higher energy and resin prices and potential working capital pressure, but the firm argues that scale, diversified procurement, and established cost pass-through mechanisms support the case for selective buying in certain packaging names. Investors should weigh the near-term inflationary challenges and timing of cost pass-through against the longer-term competitive positions Jefferies describes.