Something like 16 countries have signed on to banning single use plastics (bottles, bags, etc) – many of whom have an implementation date in the next 1-2 years. Canada is one of them. Despite the fact that Canada is not a major contributor to the plastic waste crises – I think it’s a good thing for any country to take action in. Even our PM – who was on record as having some $300/month in bottled water sent to his current residence at the Rideau Cottage, has finally decided to join the movement. Apparently, he has changed his ways – as his recent eloquent statement implies “Uh, we, uh, we have recently switched to drinking, uh, water bottles out of, uh, water out of, uh, when we have water bottles, uh, out of plastic, uh, sorry, away from plastic towards, uh, paper, um, like drink box water bottles sort of things.”
Sorry to the PM’s fans – but I just could NOT let that one slide! Anyhow–on with the show…
So, with the great, and not so great, leaders across the world banning plastics – are plastic bottle makers going to take a hit? I wanted to look at the chart patterns of some of their stocks to see if I could detect the early stages of breakdown (aka “phase 3 tops” – see my book Sideways). Many of the plastic bottle and container makers are in China, and harder to track. But we do have a couple of major plastic food container manufacturers here in North America. It’s not a big data sample to look at only two stocks – but it’s all I could find. Most NA plastic manufactures are more heavily invested in automotive parts and other products – less so in consumer orientated bottles and bags, etc. Whatever the case…This was an exercise in curiosity more than anything. Here’s my take on Berry Plastics Group and Sonoco Products.
BERY-US looks like many stocks on the S&P 500. After a rising stock trend during the past number of years, it, like the SPX itself, began to move sideways. Clearly the recent pullback came after an overbought momentum signal – as with the broader SPX. I suspect that this stock will follow the path of the broader markets. And that path is relatively sideways. The SPX has been trapped in a long consolidation period – and so has BERY. I’d view this a trader. As far as the impact of plastic container policies – the market doesn’t seem to be implying a greater risk discount to the market.
This is an uptrend if I ever saw one. In fact, it’s quite overbought – noted by the parabolic move on the stock, overbought momentum studies, and its distance above the 200 day SMA. Moneyflow is strong, and with a bit of a correction to rid the stock of its excess, I would suggest it would be a good stock to keep in mind as a potential buy. Nothing suggesting these guys – or their shareholders—are too concerned about the move away from plastic towards, uh, paper, um, like drink boxes.