Two companies that particularly interest me during the current market crash are Britvic (LSE:BVIC) and Fever-Tree (LSE:FEVR).
Market crash opportunity #1
Britvic, currently in the FTSE 250, is the largest supplier of branded still soft drinks in the UK. It also has operations in Ireland, France, and Brazil.
Some of its brands include Tango, Robinsons, and J20. In an exclusive agreement with PepsiCo, Britvic also produces and sells brands such as Pepsi and 7UP.
When the market crashed, over 30% was wiped off its share price. It had been trading for over 900p per share, but fell to around the 600p per share mark.
Britvic issued a trading and Covid-19 update at the end of March. It revealed that performance for the latest quarter was in line with expectations. The company conceded that the pandemic will have an impact on revenue and earnings. There was no final decision on its interim dividend, while will be confirmed in May. There is currently every chance it could still go ahead, which is positive.
In my opinion, Britvic is in a healthy position overall. It has over £1bn of facilities to absorb the impact of the current market crash. Although its price-to-earnings ratio is just over 23, which is slightly higher than average, there is not much risk here. Britvic’s worldwide presence and commercial agreements, as well access to cash, ease any concerns for me.
In addition, Britvic has seen profits reach over £75m each year for the past five years. Its dividend per share has increased year on year for the same period too. In my opinion this is an opportunity to pick up shares in a well-performing business at a bargain price.
Opportunity #2
Fever-Tree is a producer of premium drink mixers founded in 2004 and trading on the AIM. The West London based drinks company makes a variety of products including tonic water, ginger beer, and lemonade.
With exports to over 50 countries worldwide, some of its award-winning beverages are Indian Tonic Water, Sicilian Lemonade and Smoky Ginger Ale.
The market crash wiped off nearly 40% of Fever-Tree’s share price value. Prior to the crash, shares were trading at around 1500p per share. The market bottom saw the price close to 900p per share. At the time of writing it has climbed back close to 1400p per share.
Yesterday saw the announcement of full-year results to 31 December 2019. There were some positive indicators which further solidify my belief that the share is an opportunity in this market crash.
Revenue was up by nearly 10%, mainly due to strong growth in the US and other new territories. What I really like is that the company is debt free. It is also cash rich, with an over 50% jump in net cash from 2018 to 2019. Dividend per share also increased by 4% this year. This is not quite as high as last year’s 35% jump, but still a healthy increase.
Although Covid-19 will have an impact, the business is well equipped financially to deal with it. I think that for a relatively small and new company, it possesses a diverse portfolio of products with a global reach along with documented success. What’s not to like here?
