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A Stock That's All in the Packaging

NEW YORK (TheStreet) -- "Best Stocks Now!" come in all shapes and sizes, as well as all types of packages. Packaging Corp. of America (PKG) is no exception.

Data from Best Stocks Now App

This packaging mid-cap stock is one that I've featured many times before. In fact, I first brought people's attention to PKG in February and when I tweeted:

Look at the charts of both of those stocks today...

Courtesy of StockCharts.com

Courtesy of StockCharts.com

So don't buy the stock that makes the computer (Dell (DELL), Apple (AAPL), Hewlett-Packard (HPQ)), buy the stocks that make the boxes the computers come in!

Crazy? Yes. But true? Absolutely!

Now compare that chart that shows PKG hitting new, all-time highs with Hewlett Packard's chart.

Courtesy of StockCharts.com

Was I right? Absolutely.

Performance: PKG has been one of the best performing stocks in the market. In fact, it gets a performance grade of A-.

Data from Best Stocks Now App

Over the last five years, PKG has delivered nearly 27% returns to investors while the market has delivered only 7%. Over the last three years, it hase delivered 40% while the market has delivered 15%. Over the last 12 months PKG has been up a whopping 95% while the market is only up 18%.

Data from Best Stocks Now App

During the same time HP is up 23%, which is fair, but it's not 87%. If you look back over the last three and five years, the box stock has ran circles around the computer that was inside the box.

Valuation: There has to be much more value to the computer than the box it came in, right? Well, I'm an investor -- I'm much more interested in the stock, not the usability of the product itself. So next let's look at the valuation of PKG to find out.

Data from Best Stocks Now App

Valuation is a crucial piece to my equation in determining the value of a stock. I'm talking about valuation models that carry out earnings, growth and target prices over the next five years. PKG is currently trading at about 17 times forward earnings with a 12.3% growth rate expected over the next five years. It has a PEG ratio of 1.40.

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