Ball Corporation: Investing for the Slowdown

Ball Corporation ($BLL) is undervalued. The company’s price to earnings ratio is sitting at 21.8 while holding an earnings per share of 2.65. BLL also pays a .40 dividend while having a strong return on equity of 11.91%. Ball Corp. has a lot of cash on hand, over $700 million worth, but also has high levels of debt of around $6.73 billion.

Founded in 1880, the company is headquartered in Broomfield Colorado. Operating in the consumer goods sector, the company has made a name for themselves as a safe investment due to a twenty-four month beta of .74. The company supplies metal packaging products to the following industries; beverage, household products, and personal care. With over 17,000 employees and a market cap of $19.34 billion, Ball Corporation is a large player in the packaging and containers industry.

According to Paul Elizalde of Forbes Magazine, a 2019 recession is coming. An indicator Paul is using is the net wroth as a percentage of disposable personal income and how it tends to peak before recessions. Right now the divide is at a record level. So, if a recession is imminent and knocking on our door, we must look to invest in safe company’s that perform well during rough patches in the market. Ball Corp’s one-year return has been phenomenal. The company has a return of 48%. Looking at a company’s return during recessions is important as well. For example, during the economic downturn of 2008, the company lost 80 cents of 7% from January 2007-January 2009. During roughly the same time period the DOW Jones Industrial Average lost 33.68%. Even in the past six months while the major selloffs continues across the market heading into 2019, Ball Corp definitely felt the impact, yet remained a solid buy and returned 31.68% to investors.

When investing one must keep in mind the forever looming recessions that economists always seem to talk about. While taking on risk is important and can earn you a higher return, make sure you watch the news, read headlines, and keep an open mind to investing in safer company’s when the market seems to be on the verge of collapse.

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