2015 All-America Research Team: Paper & Packaging, No. 1: George Staphos

George Staphos

Bank of America
Merrill Lynch

First-Place Appearances: 16

Total Appearances: 25

Analyst Debut: 1993

George Staphosof Bank of America Merrill Lynch marks his 25th appearance on this roster by extending his winning streak to a 12th year. Of the 11 currently top-ranked All-America Research Team Hall of Famers, Staphos has earned the most No. 1 finishes overall, with 16. The 50-year-old researcher — who “thinks like an investor,” one fund manager remarks — reports on 29 companies in this sector. Clients particularly praise his increasing negativity on Greif, a Delaware, Ohio–based producer of containers and industrial packaging. In January he reduced his rating from buy to neutral, at $42.38, citing growing uncertainty over the company’s free-cash-flow and earnings momentum. Then in May, with the stock down 3.7 percent, he downgraded Greif to underperform. Domestic volumes and gross margins in the sector had slipped further, he advised, even as unfavorable foreign exchange rates were suppressing export-related earnings. By the middle of last month, the shares had fallen an additional 14.9 percent, to $34.74, against the sector’s decline of 8.9 percent. Also in September, Staphos turned cautious on a passel of packagers, including Charlotte, North Carolina’s Sealed Air Corp., which he had been encouraging investors to buy since elevating the stock from neutral in August 2011. He favored management’s ability to pay down debt, as well as the company’s healthy free cash flow, and repeatedly touted the name as a multiyear turnaround play. In September, however, he acknowledged that negative industry fundamentals were catching up with the maker of Bubble Wrap and Cryovac film and food packs, so he lowered his rating to hold. The shares had rocketed 194.2 percent since his upgrade, to $51.04, advancing 39.7 percent in the preceding 12 months alone. Over the life of the call, U.S. containers and packaging providers were up 85.1 percent, gaining 9 percent during the trailing 12-month period. Staphos’ price objective for the stock is $58.