With the aluminum can shortage set to continue, these 2 stocks look like the best way to play the crunch.
Throughout the coronavirus pandemic, shoppers have seen more than a few product shortages.
But while toilet paper and flour are back on store shelves, several beloved beverages have yet to restock amid an aluminum can shortage caused by the coronavirus crisis.
Beverage makers including Coca-Cola (NYSE: KO) and Molson Coors (NYSE: TAP) have said they’ve seen tightened aluminum supply amid spikes in demand for their beverage products.
And with the entire supply chain disrupted, beverage companies including Anheuser-Busch InBev (NYSE: BUD), Constellation Brands (NYSE: STZ), and Pepsi (NASDAQ: PEP) are feeling the pain.
“This is hurting the beverage makers the most,” said Chantico Global founder and CEO, Gina Sanchez. “If you’re in the business of getting beverage and product onto the shelf and you can’t get the cans to get it on the shelf, that’s a problem for you. The bigger you are, the better you can handle this, but I think that this goes back to the manufacturers as the biggest beneficiary of this cycle.”
One way to play the aluminum can crunch is to add aluminum can makers like Ball Corp (NYSE: BLL) and Crown Holdings (NYSE: CCK).
“Ball actually had the best performance [year-to-date], but Crown Holdings still has significant room for more expansion of their multiples,” Sanchez said. “So, there’s a valuation play there.”
Piper Sandler’s Craig Johnson said his pick of the two is Ball Corp.
“My favorite chart here is Ball Corp,” Johnson said. “This is a stock that is very close to breaking out to two-year new highs. I’m seeing a nice relative strength reversal versus the S&P 500. And on a measured move, on a breakout, I see this stock going to 110, so, nice upside here in that name.”
As for the metal itself, Johnson says aluminum is gearing up go move higher.
“It looks like to us that we’re setting ourselves up for a retest back to those 2019 highs,” Johnson said. “We’ve got a nice short-term downtrend reversal on the commodity. We are also seeing it move back above its 50- and 200-day moving average. And we’re starting to see a pickup in the relative strength.”
