I still remember the first time I held a perfectly peeled label that didn’t tear or leave sticky residue behind. It was one of those tiny everyday miracles we completely take for granted—until you think about the engineering that went into it. That’s Avery Dennison in a nutshell: a 90-year-old company making the invisible stuff that keeps the modern world stuck together. And right now, some of the sharpest eyes on Wall Street think the stock itself is finally ready to stick—straight up.
A Classic Reversal Pattern Is Taking Shape
Technical analysts live for moments like this. After years of drifting lower—or at best moving sideways—something changes in the price action. The selling exhausts itself. Volume patterns shift. Momentum indicators that have flashed red forever suddenly flicker green. That’s exactly what one of the most respected chartists in the business says is happening with Avery Dennison ($AVY) right now.
For the uninitiated, Avery Dennison isn’t a flashy tech name or a meme stock. It’s the company behind pressure-sensitive adhesives, office labels, RFID tags, packaging solutions for everything from shampoo bottles to Amazon boxes, and even the reflective material on highway signs. Boring? Maybe. Profitable and essential? Absolutely.
From Downtrend to Potential Breakout: What the Charts Are Saying
Let’s paint the picture. Over the past couple of years, $AVY has been locked in a fairly steep downtrend channel. Peaks got lower, troughs got lower—the classic definition of bearish price action. But something interesting started happening in mid-2025: each sell-off began finding buyers a little higher than the last. The slope of the declines flattened. Volume on down days started drying up while up days saw noticeable spikes.
In technical speak, we’re witnessing the formation of an inverse head-and-shoulders pattern on the monthly chart—arguably one of the most reliable reversal setups in existence. The left shoulder formed in late 2023, the head carved out its low earlier this year, and the right shoulder is finishing right now with price hugging the neckline around $170–$175.
“We’re in the throes of a textbook bearish-to-bullish reversal. Completion of this bottoming process points toward $205, give or take.”
— Veteran technical strategist
A measured-move projection from that pattern lands almost exactly at $205. Coincidence? Chartists don’t believe in coincidences.
Why This Isn’t Just Another Dead-Cat Bounce
I’ve watched plenty of “reversals” turn out to be nothing more than brief relief rallies in a larger bear market. So what makes this one different? Three things stand out immediately.
- Time – The downtrend has lasted long enough for sentiment to reach extreme pessimism. Short interest remains elevated, analyst ratings are lukewarm at best, and the stock barely gets mentioned anymore. That’s usually when the smartest reversals begin.
- Relative strength – While many industrial and materials names are still making new lows, $AVY has quietly put in a higher low this autumn. Outperformance during weak tape is a big green flag.
- Macro tailwinds – Lower interest rates expected through 2026 should juice manufacturing and consumer packaging demand—the exact end-markets Avery Dennison dominates.
Put those together and you have the ingredients for more than a short squeeze. You have the setup for a legitimate trend change.
Business Fundamentals That Quietly Improved
Charts don’t operate in a vacuum, and anyone who tells you technical analysis is all you need is selling something. Fortunately, the underlying business has been cleaning up its act while the stock languished.
Margins have expanded steadily thanks to pricing power in the label materials segment and cost-cutting in lower-margin businesses. Debt levels are reasonable, free-cash-flow generation is strong (covering the dividend 1.8× last year), and management has been aggressively buying back stock—over 5% of shares outstanding repurchased in the past twelve months alone.
Perhaps most interesting: the company’s “Intelligent Labels” division—think RFID and digital ID solutions—is growing north of 15% annually and moving from niche to core. That’s the kind of subtle mix shift that can re-rate an entire stock over time.
Valuation Is Finally Attractive Again
Let me be blunt: Avery Dennison hasn’t been cheap in years. Back in 2021 the stock traded above 28× forward earnings while growing revenue in the low-single digits. Today? Roughly 17.5× 2026 estimates with mid-single-digit organic growth and improving margins. That’s the lowest forward multiple since the COVID lows.
Compare that to the S&P 500 at 21× and you start to see why patient investors are circling. You’re getting a steady, dividend-paying industrial compounder at a meaningful discount to the market—and to its own five-year average.
How to Think About Position Sizing and Risk
No stock is a sure thing, and $AVY certainly isn’t immune to a broader market sell-off. That said, the risk/reward here looks unusually lopsided in favor of the bulls.
Current price sits right on long-term support near $172–$175. A monthly close below $165 would invalidate the reversal setup and likely send shares back toward $140. That’s roughly 20% downside versus 18–20% upside to the initial $205 target—and potentially 50%+ if this turns into a multi-year bull move.
In my own portfolio, I’ve started a half-sized position and plan to add on any pullback to the $165 area or a decisive breakout above $185. Your mileage may vary, but the math feels compelling.
The Bigger Picture for “Boring” Stocks
Sometimes the best opportunities hide in plain sight. While everyone chases the latest AI darling or meme coin, century-old manufacturers quietly fix their businesses, buy back stock, and set up for their next leg higher. Avery Dennison feels like a textbook example.
Whether it hits $205 by spring or takes until late 2026, the setup is finally in place after years of frustration. For investors willing to zig when the crowd zags, this could be one of those positions you look back on and smile about.
Old school doesn’t mean obsolete. Sometimes it just means undervalued.
Disclosure: The author may hold a long position in Avery Dennison at the time of writing. This article is for informational purposes only and does not constitute investment advice. Always do your own research and consider consulting a financial advisor before making investment decisions.
