While the broader market has struggled with the S&P 500 down 2.3% since October 2025, Avery Dennison has surged ahead as its stock price has climbed by 5.4% to $171.47 per share. This run-up might have investors contemplating their next move.

Is now the time to buy Avery Dennison, or should you be careful about including it in your portfolio? Check out our in-depth research report to see what our analysts have to say, it’s free.

Why Is Avery Dennison Not Exciting?

We’re happy investors have made money, but we're sitting this one out for now. Here are three reasons you should be careful with AVY and a stock we'd rather own.

1. Slow Organic Growth Suggests Waning Demand In Core Business

We can better understand Industrial Packaging companies by analyzing their organic revenue. This metric gives visibility into Avery Dennison’s core business because it excludes one-time events such as mergers, acquisitions, and divestitures along with foreign currency fluctuations - non-fundamental factors that can manipulate the income statement.

Over the last two years, Avery Dennison’s organic revenue averaged 2.3% year-on-year growth. This performance was underwhelming and suggests it may need to improve its products, pricing, or go-to-market strategy, which can add an extra layer of complexity to its operations.

2. Projected Revenue Growth Is Slim

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect Avery Dennison’s revenue to rise by 4.3%, close to its 4.9% annualized growth for the past five years. This projection doesn't excite us and implies its newer products and services will not catalyze better top-line performance yet.

3. New Investments Fail to Bear Fruit as ROIC Declines

ROIC, or return on invested capital, is a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. On average, Avery Dennison’s ROIC decreased by 3.4 percentage points annually each year over the last few years. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.

Final Judgment

Avery Dennison isn’t a terrible business, but it isn’t one of our picks. With its shares topping the market in recent months, the stock trades at 17× forward P/E (or $171.47 per share). This valuation is reasonable, but the company’s shakier fundamentals present too much downside risk. We're pretty confident there are superior stocks to buy right now. Let us point you toward our favorite semiconductor picks and shovels play.

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