PKG – Rare 40% Investment or Defensive Opportunity?

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Fundamental Indicators:

• Sector – Consumer Cyclical
  
• US Business Cycle Stage – late cycle, when this sector is not favourable
  
• Revenue – consistent growth for the past 5 years, although just 6% average annual rate, 2022 TTM
  
• Profits – confidently rising since 2020
  
• Net margin – decent 12%
  
• P/E – quite low with just 13 ratio compared to S&P500 with 21 and Consumer Cyclical sector with 23
  
• Liabilities - debt ratio is at 0.52 which is within the norm, Net Debt/ EBITDA is 0.89 – no problems with debt
  
• Conclusion – great value with current financial positive dynamics, likely to continue uptrend
  

Technical Analysis (Elliott Waves):

• Main scenario of this idea suggests that we are still observing development of the global growth cycle which is currently at the stage of completing wave 4 and starting bull run in the fifth (see higher timeframe graph)
  
• Since correction of 2020 we can clearly observe development of an impulse. However, the latest sideway correction which started in January 2021 is very likely to form as rare pattern Expanding Triangle. Waves A, B,C and D have completed, and wave E is currently progressing. It is tricky to identify the final point of this wave but it is most likely to culminate in the range of $120-$125 representing the low of wave C and 0.5x of wave 3
  
• Once completed, there will be another bull run in wave 5 with minimum target of $169 – which may present up to 40% opportunity
  

This is a higher timeframe to reflect the full history of Packaging Corporation of America and to provide full wave count:

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