As the glassware industry serves many markets, there are several factors driving its growth. This is due to the versatility, clarity, durability and aesthetic appeal of glass. Advances in glass technology have also played an important role in the growth of the industry. Innovations such as smart glass, self-cleaning glass, and energy-efficient coatings have expanded the range of applications for glassware. Rising disposable incomes of consumers, urbanization and expanding middle class population in emerging markets are also stimulating demand for glass products, especially in the Asia-Pacific region.
According to Global Market Insights, the glass manufacturing market is expected to grow at a CAGR of 4.8% between 2023 and 2032, owing to rising demand for consumer electronics. However, glass is also widely used in several other industries.
construction: Glass is a versatile material that can be used to create a variety of aesthetic and functional effects in buildings. As glass is a relatively energy efficient material, it also helps reduce heating and cooling costs for buildings. Therefore, both commercial and residential buildings are sources of demand. In addition, urbanization is also a big factor. This is as a result of an increase in overall construction activity, resulting in increased demand for windows, doors, mirrors, facades, architectural features, furniture, and other items that use glass. Data Bridge Market Research expects the architectural glass market to grow at a CAGR of 7.5% between 2022 and 2030.
car: The glass is lightweight, strong and transparent, thus protecting the occupants in the event of an accident and providing visibility to the driver. Rising demand for automotive glass such as windshields, side windows, mirrors and even more and more interior screens is also driving the growth of the glassware industry. Although a bit dated, data available from Mordor Intelligence shows that the growth forecast for the automotive glass industry is at a CAGR of 5% from 2021 to 2026.
electronics: Glass is a strong, scratch-resistant material that protects your electronics from damage. Its transparency is also a factor driving its use in displays. Increasing demand for glass in electronic devices such as smartphones and tablets is also driving the growth of the glassware industry.
packaging: One of the industry’s strongest drivers is the packaging sector, which includes food and beverages, pharmaceuticals, cosmetics and other sectors. The growing demand for sustainable and environmentally friendly packaging has made glass containers the preferred choice over plastic.
Glass is recyclable and offers better preservation and protection. food and beverage. It is also a relatively inert substance, so it does not change taste or flavor. With increasing consumption worldwide, the demand for glass packaging in food and beverage products such as beer, wine and spirits is increasing, driving the growth of this sector.
demand in cosmetic This segment relates to the protection of chemical compositions, fragrances and other properties such as perfumes and lotions.
of pharmaceuticals This sector is also expected to grow at a healthy pace due to increasing demand for glass packaging in pharmaceuticals. Preservation is also a key factor here, and the inertness of the glass and its ability to withstand extreme temperatures play an important role.
Additional factors driving demand for glass packaging:
sustainable packaging: Glass is a recyclable material that can be reused indefinitely. It is also a relatively inert material, meaning no chemicals leach into food or beverages.
premium feeling: Glass is often associated with quality and luxury.
Tamper evident packaging: Glass is a strong, durable and tamper-resistant material. Being relatively transparent, consumers can see the contents of the package before making a purchase.
According to GMI Insights, the glass packaging market is expected to grow at a CAGR of 4.5% from 2023 to 2032, with borosilicates being the strongest category.
If glass production were to stop for any reason, it would take months to restart, and the same thing happened during the pandemic. This creates a backlog that is very difficult to make up for. In addition, the last few years have seen significant supply chain problems, resulting in higher energy prices, further restricted supply and higher prices. Therefore, there is a certain amount of pent-up demand in the market today. Improved availability will inevitably normalize prices, which will have a certain impact on the company’s performance. This in no way negates the growth story outlined above. On the other hand, this market remains relatively stable in any economy due to factors such as its relevance to commodities, environmental impact, and increasing urbanization in many regions.
Here are some stocks to consider for those looking for industry exposure.
O Eye Glass Co., Ltd. (OI)
Based in Perrysburg, Ohio, OI Glass is one of the world’s largest manufacturers of glass packaging, with manufacturing facilities around the world and serving customers in more than 82 countries. The company provides glass containers for a wide range of industries, including food and beverages, alcoholic beverages, pharmaceuticals, and cosmetics. The company’s glassware includes bottles and jars in a variety of shapes, sizes and colors to meet customers’ unique packaging needs. The company reduces its environmental impact through its responsible glass production and recycling efforts. The company sells its products directly to customers under annual or multi-year supply agreements, as well as through distributors.
OI-Glass reported an unexpected return of 55.4% against an unexpected return of 2.8%.
Forecasts for 2023 increased by 30 cents (10.5%) over the past 30 days, representing a 37.8% growth from 2022. Forecasts for 2024 average an increase of 16 cents (5.5%), or a slight decrease from this year’s explosive growth (although revisions to estimates continue in the same direction, ultimately leading to can grow from ).
The stock appears to be undervalued from both the S&P 500 and industry perspectives. It currently trades at a 58.4% discount to the S&P 500 and a 38.9% discount to the industry. It is also trading at a 7% discount to the median price of the past year. No wonder they hold a Zacks Rank #1 (strong buy).
Apogee Enterprise Co., Ltd. (Apog)
Based in Minneapolis, Minnesota, Apogee Enterprises is a leading provider of architectural glass, aluminum framing systems and installation services. The company specializes in the design, manufacture and installation of glass and metal products for commercial buildings such as office buildings, retail centers, hotels and medical facilities. The company’s products include curtain wall systems, storefronts, entrances and windows. The company also offers architectural glass coatings and other value-added services to enhance product functionality and energy efficiency.
Apogee’s 3.6% earnings growth isn’t all that impressive, especially considering that holiday closures and normal seasonality impacted sales volume, which resulted in sales slightly underperforming at about 1.3%. There was no. The company is exiting low-margin businesses as part of a 2022 restructuring and new strategic direction. A more differentiated product range, leaner new initiatives, a strong pricing environment and appropriate M&A are part of our long-term strategy.
Therefore, the Zachs consensus forecast for the year ending February 2024 is up a few cents over the past 60 days and up a penny next year. Both sales and earnings are expected to be flat and slightly weaker this year. Next year’s sales and profits are now expected to grow by 1.4% and 3.5% respectively.
Apogee is trading at a 15.6% discount to the industry and a 48.6% discount to the S&P 500. It also trades at a 12.8% discount to the median price of the past year. So by all accounts, the stock is grossly undervalued and has room to rise. The company appears unfairly penalized for short-term challenges, creating a buying opportunity.
Year-to-date price performance
Image Source: Sachs Investment Research
Want the latest recommendations from Zacks Investment Research? Download today the 7 best stocks for the next 30 days.Click to get this free report
OI Glass Co., Ltd. (OI): Free Stock Analysis Report
Apogee Enterprises, Inc. (APOG) : Free Stock Analysis Report
Click here to read this article on Zacks.com.
Zacks Investment Research