The Expectations For West Pharmaceutical Look Hard To Meet

I'm accustomed to finding a lot of companies/stocks with the basic pattern of "love the company, not comfortable with the valuation on the stock," but West Pharmaceutical Services (NYSE:WST) dials that up to 11. I really like the company's strong share in biologics delivery systems/components, its overall share in components and systems for injectable drugs, and its leverage to higher-margin, higher-growth proprietary products serving a market that I believe is set for good volume growth for the long term. What I don't like is that it would appear that not even long-term annualized FCF growth in the mid-teens or a 15x forward EBITDA multiple is enough to drive a fair value above today's price.

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The Expectations For West Pharmaceutical Look Hard To Meet

Investopedia: MeadWestvaco's Sum Of The Parts Doesn't Seem To Add Up To Value

MeadWestvaco (NYSE:MWV) has always been a little more willing than average to realign its business towards better long-term returns for shareholders. To that end, the company has been willing to divest/sell businesses (including its consumer and office products business (which merged with ACCO Brands (NYSE:ACCO)) while acquiring packaging and chemicals businesses in faster-growing areas like Brazil and India. That said, while MeadWestvaco does indeed look like a well-run packaging and specialty chemicals company, it's difficult to generate a cash flow scenario that suggests these shares are dramatically undervalued.

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Investopedia: Deleveraging And Diversification Make Graphic Packaging Worth Watching

By and large, it's hard to get excited about owning paper and paper packaging stocks for the long term. A few strong operational stories such as Rock-Tenn (NYSE:RKT) and Packaging Corp (NYSE:PKG) have outperformed, but by and large this is an industry with very modest revenue growth and highly variable input costs. All of that said, I think investors should take a closer look at Graphic Packaging (NYSE:GPK). Not only has the company made good progress with operating efficiencies, it is also a long-term deleveraging and diversification story.

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Investopedia: Is Too Much Expected Of Bemis?

It would stand to reason that a company's products that help extend the shelf life of food and/or offer improvements in customer experiences would do pretty well. And to a certain extent, that has been true for Bemis (NYSE:BMS). At a minimum, Bemis has been an excellent dividend stock. The question now, though, is whether investor expectations are running a little too high for a company whose competitive advantages don't really translate into clearly superior returns on capital or free cash flow (FCF).

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http://www.investopedia.com/stock-analysis/2012/Is-Too-Much-Expected-Of-Bemis-BMS-SEE-SON-ATR1228.aspx