Strength and resilience at DS Smith

However, this singular pursuit is invariably bound up with a given investor's tolerance for risk. Realistically, if you're looking to build a profitable portfolio over the long run, then you should probably place as much importance on earnings predictability - and let the compounding effect do the rest. Remember, it's a marathon, not a sprint.

Packaging is another of those dull areas that is often overlooked. That's unfortunate as the sector is home to a number of companies that combine a history of solid earnings growth with relatively low-risk investment profiles. With this in mind, we want to reiterate the long-term investment case for DS Smith (SMDS) - one of Europe's largest producers of corrugated and plastic packaging - whose shares we suggested buying back in May 2015 at 371p. The share price is now around 12 per cent above that earlier call, but there are sound reasons to think that DS Smith, which has more than doubled its revenues over the past five years, will continue to grow both organically and through targeted acquisitions.

Acquisitions are important because DS Smith operates in a relatively fragmented industry in which the packager scents opportunities. DS Smith has been expanding market share through an aggressive acquisition strategy designed, among other things, to place the group at the apex of the sustainable packaging market in Europe; a wise move given the rising tide of environmental regulation governing the sector.

In its financial year to the end of April 2016, it spent £433m on five acquisitions, either entering or expanding in 13 European countries. These acquisitions drove up net debt by £448m to £1.1bn, or two times cash profits, which is in line with management's medium-term target. Even so, the outlay represents a hefty commitment within a single year. But the rationale for the deals looks compelling; certainly not a case of pursuing growth for growth's sake.

Over time, these additions should help drive earnings through increased sales combined with cost synergies. The group can consolidate acquisitions into a bigger and more efficient supply chain, complemented by its paper and recycling operations. An enlarged corporate network should also enable management to extend commercial relationships with pan-European clients, while providing further cross-selling opportunities. But there's no free ride; once these companies are bedded in, they'll be expected to meet management's target for ROACE (return on average capital employed) of 12-15 per cent.

A good track record when it comes to integrating new operations has underpinned DS Smith's ability to scale up its operations. But investors also stand to benefit from some of Smith's inherent defensive qualities. Roughly 78 per cent of Smith's packaging products are destined for fast-moving consumer goods - for example, food and drink containers - and, although consumer spending on staples isn't totally unaffected in economic downturns, it is resilient. The remainder of the group's products are used for industrial packaging. While this area is more cyclical, it has also been steadily benefiting from the rise of online retail.

Smith's shares are now trading in line with the packaging sector at 13 times forecast earnings, although slightly above the average multiple of the group's enterprise value to its cash profits. In other words, the shares don't look screaming value at the moment. That said, forecast dividends for this year - on which there is ample cover - still generate 3.4 per cent yield.