Navigating the Metal Tariff Surge: Undervalued Packaging & Staples Giants Thriving Amid Cost Pressures

The Trump administration's 50% tariffs on steel and aluminum imports—effective June 2025—have sent shockwaves through industries reliant on these metals. Consumer staples and packaging sectors face soaring material costs, supply chain bottlenecks, and margin pressures. Yet within this storm, a handful of companies are emerging as undervalued winners, leveraging innovation and vertical integration to turn tariffs into opportunities. Here's why investors should take notice.

The Tariff Tsunami: How Metals Costs Are Rocking Consumer Goods

The doubling of tariffs on steel and aluminum has created a perfect storm for industries using these materials. Aluminum prices surged 139% between February and May 2025, while steel costs rose 77%, per BCG analysis. This directly impacts packaging manufacturers, who rely on metals for cans, closures, and containers. Beverage companies, food producers, and household goods firms are all scrambling to absorb or pass along these costs.

The ripple effects are clear:
- Canned Goods: Aluminum tariffs have pushed up the cost of beverage cans by 20%, with the Can Manufacturers Institute warning of potential price hikes for consumers.
- Industrial Packaging: Steel drums and containers face similar pressures, squeezing margins for chemical and automotive suppliers.
- Global Sourcing: U.S. companies now face strict “melted and poured” standards for imported steel, complicating compliance and raising logistics costs.

How Undervalued Companies Are Thriving

While many firms are struggling, a select group has positioned themselves to weather—or even capitalize on—these headwinds. Their strategies fall into two buckets: innovation-driven cost mitigation and vertical integration to control supply chains. Let's spotlight three standout plays.

1. Transcontinental Inc (TCL-B: TSX) – The Sustainable Packaging Pioneer

Why it's undervalued: Transcontinental's stock (TCL-B) trades at a 7% discount to its intrinsic value, according to Stockcalc's analysis. Its flexible packaging division, critical for food and beverage markets, is undervalued despite its eco-friendly innovations.

The Edge:
- Sustainable Materials: Transcontinental is pivoting to recyclable and biodegradable packaging solutions, reducing reliance on tariff-hit metals. Its flexible plastic roll stock and paper-based coatings align with global sustainability trends.
- Vertical Integration: By controlling manufacturing from raw materials to finished goods, the firm avoids tariff spikes on imported components. Its 2024 acquisition of a U.S.-based plastics supplier further strengthens this moat.

Why Buy Now: TCL-B's P/E ratio of 12.5 is well below its 5-year average of 16.3. With rising demand for sustainable packaging and minimal debt, this is a rare value play in an expensive sector.

2. NEXE Innovations (NEXE: TSXV) – The Biodegradable Disruptor

The Play: NEXE develops biodegradable paper-based bottles and containers, offering a direct substitute for aluminum and steel packaging. Its valuation (CAD$2.50/share vs. a target of CAD$4.00) reflects undervalued growth potential.

The Edge:
- Tariff Immunity: NEXE's paper-based solutions avoid metal tariffs entirely, making its products more cost-competitive than traditional cans.
- Scalability: Partnerships with global beverage giants (e.g., Coca-Cola) are in advanced stages, with pilot programs launching in 2025.

Why Buy Now: NEXE's market cap of $300M versus its $500M addressable market in sustainable packaging suggests massive upside. Investors should act before its products hit mass retail shelves.

3. Procter & Gamble (PG: NYSE) – The Brand Powerhouse

Why it's undervalued: PG's P/E of 21 is below its 5-year average of 24, despite its fortress balance sheet and pricing power.

The Edge:
- Global Brand Muscle: P&G's household staples (Tide, Gillette) allow it to pass costs to consumers without losing market share.
- Vertical Integration: Its 2024 acquisition of a U.S. aluminum supplier for packaging needs insulates it from tariff volatility.

Why Buy Now: PG's dividend yield of 2.8% offers safety, while its R&D investments in eco-friendly packaging (e.g., recyclable detergents) position it for long-term growth.

Risks & Opportunities

• Upside: Companies with sustainable materials or vertical integration could see 20-30% upside as tariffs solidify their market share.
• Downside: Further tariff hikes or global recession could stall demand. Monitor trade negotiations closely.

Final Take: Invest in Innovation, Not Inflation

The metals tariffs are a double-edged sword: while they pressure margins, they also accelerate the shift toward sustainable and localized supply chains. Transcontinental, NEXE, and P&G are leading this pivot. For investors, these names offer a rare chance to buy undervalued stocks with secular growth tailwinds.

Action Items:
1. Buy TCL-B for its undervalued sustainable packaging play.
2. Add NEXE as a high-risk, high-reward bet on biodegradable disruption.
3. Hold PG for dividends and brand resilience.

In a world where metals are costly, the companies solving for sustainability and control will be the last standing—and the first to thrive.

Data as of June 19, 2025. Past performance ≠ future results. Consult a financial advisor before investing.