oi is the kind of stock that is likely under the radar screens of most investors, even though it has gained 22% year-to-date. the company is the world's largest maker of glass containers, a business that is booming these days with the push to move away from plastic containers that have a harmful impact on the environment.
in fact, oi is beginning to make glass baby bottles for the first time in about two decades, as there is a push in canada to remove all plastic bottles from the shelves because they contain harmful chemicals. i believe this cause will also take off in the U.S., as folks are proving they're willing to pay more these days for food and products that are potentially less harmful to their own health and the environment as a whole.
oi generates about 70% of its sales outside of north america. plus, demand for beer bottles and other glass food and beverages containers are not that sensitive to the health of the broader economy anyway. at the same time, the company is seeing strong pricing power across the board, as the global market for bottles is supply-constrained.
this allowed the company to blow away fourth-quarter expectations back in january, and i expect a similar result when the company announces first-quarter results on 4/30/08.
at current levels, the stock is valued at just 14.4 times expected 2008 earnings of $4.16. i believe this number will prove conservative, and that shares of oi could trade up through $75 over the coming quarters.
disclosure: none, but seriously looking