CCL Industries is one household goods stock that we regularly examine on The Back Page (of The Investment Reporter). Since we published our May 10 issue, the shares have jumped by 17.5 per cent. CCL remains buy for further long-term gains and rising dividends. It has raised its dividend each year since 2001, when it paid 32 cents a share.

At first glance, the shares look overpriced. They trade at 22.9 times their expected 2013 earnings of $3.20 a share. But on Canada Day, CCL completed the acquisition of businesses from Avery Dennison (one of our U.S. all-star stocks). As a result, CCL is expected to earn about five dollars a share in 2014. Based on this estimate the shares trade at a reasonable price-to-earnings ratio of 14.6 times.

In the six months to June 30, CCL earned an adjusted $1.86 a basic share. This was up by 10.7 per cent from $1.68 a share, a year earlier. The adjustments exclude one-time items, such as financing costs leading up to the acquisition of Avery Dennison’s Office & Consumer Products and Designed & Engineered businesses.

President and chief executive officer Geoffrey Martin said, “We are pleased to announce the eleventh consecutive period of year-over-year improvement in quarterly adjusted earnings per share.” This was due to “robust results at CCL Container and the Label Segment delivering steady improvement.” In 2013, CCL is expected to earn $3.20 a share-up by 11.9 per cent from $2.86 a share last year.

The Label segment is much larger than the Container segment: in the first half, Labels generated sales of $622 million, or nearly 86 per cent of total sales of $725 million; Labels generated operating income of $102 million, or close to 91 per cent, of total operating income of $112 million.

The acquisitions of Avery Dennison’s businesses will transform CCL industries. It expects to earn far more in 2014. And CCL’s net debt-to-cash-flow ratio is much higher than the 0.5 times shown in the statistics below.

CCL now operates 87 production facilities in 25 countries on five continents. This lets it meet the needs of big international customers. This geographical diversification reduces its exposure to weakness in any one region. These large global customers are in the consumer packaging, healthcare, automotive and consumer durables markets. CCL adds, “Avery is the world’s largest supplier of labels, specialty converted media and software” services. This cuts its risk from weakness in any one market.

CCL remains a buy for long-term gains and rising dividends.

TSX-CCL.B; Rating: Conservative; Sector: Manufacturing; Dividend: $0.86; Yield: 1.2%; O/S shares: 34.1 million; MRI: 19.4; MGI: 0.7; Five-year return: 144%; 52-week range: $75.18-$36.00; Net debt-to-cash-flow: 0.5; ROE: 11.7%; Directors own: 7.9%; T: 416-756-8526; www.cclind.com.