Investors around the world have become nervous in recent weeks. Where to invest in the last quarter of the year as increased volatility is an urgent concern for many market participants.
As a result, even established defensive actions have hit their stock prices in 2020, creating better opportunities for investors who want to buy while stock prices are lower. Below we will take a closer look at two FTSE affiliated beverage companies:
Britvic
Most British market viewers would be familiar with the member Britvic (LON 🙂 (OTC 🙂 , whose history dates back to the 19th century.
Soft drinks include Robinsons, Tango, Fruit Shoot and J2O. The group also has the exclusive rights to manufacture and distribute PepsiCo's (NASDAQ 🙂 global brands in the UK. Earlier this month, the franchise bottling agreement with PepsiCo was extended for another 20 years.
Britvic's brand names provide the group with a loyal customer base and pricing power. Currently, the company is the UK's largest supplier of branded non-sparkling soft drinks, as well as the number two supplier of branded carbonated soft drinks domestically. It has also expanded its global reach through franchising, export sales and licensing. Current activities outside the UK extend to Ireland, France and Brazil, among others.
On October 20, Britvic announced that "it intends that all plastic bottles in GB be made from 100% recycled plastic (rPET) by the end of 2022 – three years ahead of originally planned, and ahead of the previous goal of 50. %. "
At the time, management also issued a trading update, saying revenues during the peak summer period " were better than expected." However, uncertainties remain due to the possible effects of the pandemic on the UK hospitality industry.
In recent years, the group has been innovative in offering a range of beverages for different groups of consumers whose dietary needs and desires may differ, such as 18-24 year olds, under 35s, and 50+, with special emphasis on the low / no added sugar portfolio. Management has defined its strategic priority as "healthier people, healthier planet."
Over the past decade, Britvic has achieved stable long-term shareholder returns from about 470p in October 2010 to its current price of 777p ($ 20.81 for US stocks). That's a compound annual growth rate (CAGR) of more than 5%. The current dividend yield for UK resident shares is 2.7%.
So far, BVIC stock has declined by about 12% in 2020. The forward P / E and P / S ratios stand at 15.04 and 1.45. In comparison, PEP shares are up about 1% in 2020 and the projected P / E and P / S ratios are 22.57 and 2.81.
Given its strong brands, we consider Britvic a defensive powerhouse. So the stock price weakness this year may be an opportunity to pick up some of the stock.
Coca Cola HBC
Coca Cola HBC (LON 🙂 (OTC 🙂 bottles and distributes Coca-Cola (NYSE 🙂 products in nearly 30 out of three countries continents. Some of the brands include Coca-Cola, Coca-Cola Zero, Schweppes, Costa Coffee, Fanta, Sprite, Powerade and Cappy.
Coca Cola HBC Weekly Chart
From the Republic of Ireland in the west to the Pacific coast of Russia in the east and to Nigeria, the southernmost market, the company serves more than 600 million consumers. In 2019, total revenue was just over € 7 billion (£ 6.34 billion or $ 8.28 billion).
Headquartered in Zug, Switzerland, the group divides its markets into three segments:
Established Markets (contributed 36% to net sales in 2019);
Emerging Markets (contributed 19% to net sales in 2019);
Emerging markets (contributed 45% of net sales in 2019).
In 2020, however, Coca-Cola HBC took a hit. The company released half-year results in August. Sales declined 14.7% yoy, while volume declined 9.2%. The declines were largely due to lockdowns in many countries, leading to lower spending on out-of-home spending.
CEO Zoran Bogdanovic said:
“Our swift, decisive actions ensured that our supply chain was uninterrupted and our profitability protected during a very challenging second quarter … Coca-Cola HBC is a resilient company, well positioned to adapt when markets weather opening up, coming forward even stronger and winning in the new normal. ”
Year-to-date, shares are down about 18%. On Oct. 27, CCH closed at 1,889.5p ($ 24.80 for US stocks) and supports a 2.97% dividend yield. Forward P / E and P / S ratios are at 16.23 and 1.22. In comparison, the KO share is down 9% and the expected P / E and P / S ratios are 22.83 and 6.43.
Coca-Cola HBC is expected to release its Q3 figures on November 11th. Between now and then, there may be more volatility in the stock price with a possible downward tendency. Still, we would try to buy the dips in CCH shares.
