Regular readers will recall that we’ve recently discussed the potential for a secular commodity bull run. That’s evidenced in the resurgence of dealmaking interest, as reports indicate that Rio Tinto (RIO) and Glencore (GLNCY) are now close to a tie-up that would create the world’s largest copper miner. With aluminum futures once again starting the week on a high note, here’s a slightly more under-the-radar trade – and it’s one that might be of particular interest to those investors who recall one of the least sporting subplots of the 2022 World Cup in Qatar (bear with me, now).
Ball (BALL) is a can and bottle manufacturer; you might remember their jars from your grandma's house, or your Pinterest-loving neighbor’s. But their largest customer is actually AB InBev (BUD), the parent company of Budweiser.
Bud makes up 17% of Ball's revenue, but they’re no one-trick pony. Revenue also comes from energy drinks, Molson Coors (TAP), and consumer goods like aerosol cans. Following the divestiture of its aerospace business in early 2024, Ball is now a "pure-play" aluminum packaging entity.
We've seen the rise in aluminum prices, and I believe Ball has the pricing power to pass on the cost. The chart for BALL also looks good, if a little overbought at the moment; however, it clearly looks like it's trending towards the $60+ area. That’s about a 10% gain from here.
Notably, AB InBev itself just invested $3 billion to repurchase a 49.9% stake in its U.S.-based metal container plants, citing supply security and cost efficiencies.
As for the Qatar connection – this year, the World Cup is in the U.S., Canada, and Mexico, where there are (relatively speaking) far fewer cultural taboos against canned beer. Guess who the official beer sponsor is? You guessed it; Budweiser. And sorry; there’s no glass allowed in FIFA stadium venues…
– John Rowland, CMT, is Barchart’s Senior Market Strategist and host of Market on Close.
