Packaging Corporation of America (PKG) reported net margins of 10.9% in its most recent quarter, up from 9.2% a year earlier. Over the past four quarters, PKG's net margins have steadily improved from 9.2% to 10.1%, 10.5%, and 10.9%. This margin expansion appears to be driven by a combination of factors: 1. PKG has raised prices, with revenue growing 31.9% year-over-year in the latest quarter despite a more modest 8.3% increase in sales volume. 2. The company has also reported success in controlling costs, with operating expenses as a percentage of revenue declining from 89.8% to 89.1% over the past four quarters. 3. Packaging demand remains robust, with PKG noting "continued strong demand across our packaging business" in its recent earnings release. These trends suggest PKG has pricing power and operational leverage that could enable further margin expansion going forward. Given PKG's demonstrated ability to drive margin improvement, I believe the company can reach net margins of 11.5-12.0% over the next 12 months. This would imply 10-15% upside to the current share price of $65.55. The combination of rising prices, cost controls, and solid end-market demand make PKG an attractive investment opportunity. I rate the stock as bullish with a conviction of 7/10.

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