Berry Plastics Group (NYSE:BERY)

CAPS Rating: 2 out of 5

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Member Avatar TMFBlacknGold (98.64) Submitted: 12/19/2012 9:10:12 AM : Underperform Start Price: $15.33 BERY Score: -16.55

The recent IPO vaulted Berry Plastics to a market cap of $1.75 billion. While the company raised somewhere around $470 million it has a long way to go before gaining much needed financial flexibility (pre-IPO books show -$452 million in shareholders' equity!). You have to figure there is an enormous amount of competition in the plastic molding/blowing space.

I'll keep an eye on Berry because they do rake in nearly $5 billion in revenue each year. Not much of that goes to net income (a microscopic 0.042% profit margin), but perhaps that just means there is plenty of room for improvement?

A very different company with a much brighter future is Kraton Performance Polymers (NYSE: KRA), which designs plastic/polymer resins for many high-value applications - one of which could transform the asphalt industry.

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Member Avatar cpakev (< 20) Submitted: 11/2/2012 12:19:59 PM : Underperform Start Price: $14.08 BERY Score: -30.66

BERY has very high (and expensive) debt in a capital intensive market. They will need to generate significant cash to service the debt and fund ongoing capital improvments. Don't see it happening...

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