Humble beginnings to world domination
In 2004, Charles Rolls and Tim Warrillow saw a gap in the market for mixers. In 2005, Fevertree was born and by 2014 it floated on the London Stock Exchange. As of today, Fevertree is one of the leading suppliers of alcoholic mixers throughout the world.
As I write, Fevertree shares are trading for 2,587p. A year ago, shares were trading for 2,460p, which is a 5% return over 12 months. The Fevertree share price has surpassed pre-crash levels comfortably. The majority of my best stocks to buy now have achieved the same feat.
Why I like Fevertree
- Fevertree’s rise from a small UK-based firm into one of the largest premium mixers suppliers throughout the world is admirable. Such levels of growth and performance are seldom seen in young firms in a competitive marketplace. Growth to date in its in products, profile, offering, and footprint make me believe the sky’s the limit. It seems the firm has the same belief and it continues to expand and aggressively grow, which is great to see. This could result in further positive performance and further returns for investors.
Excellent performance has driven Fevertree’s growth. Fevertree recently provided an interim report for the period ending 30 June, which made for excellent reading. Revenue in each of its territories increased resulting in an overall revenue increase of 36% compared to the same period last year. Gross profit increased by 28% and an interim dividend was declared of 5.52p. I like stocks to make me a passive income through regular dividends. It seems reopening has benefitted Fevertree and it is capitalising on it as well as rewarding shareholders.
- I usually review historic performance when assessing investment viability. I understand the past is not a guarantee of the future but I like to use it as a gauge. Revenue and gross profit increased year on year for three years prior to 2020. This was the year affected by the pandemic. 2020 was still a decent year, albeit affected by pubs and bars closing, and revenue and profit levels weren’t far off 2019 levels.
The best stocks to buy now have risks too
Macroeconomic pressures could affect Fevertree. Rising inflation and costs could eat away at margins and potentially any returns. The supply chain crisis could affect operations. It is also worth noting Fevertree looks a bit expensive at current levels.
I am aware of the risks it faces but I consider these short-term issues. As a Foolish investor, I invest for the long term. At current levels I would add Fevertree shares to my portfolio. It has grown into an excellent company that performs consistently well and I expect this upward trajectory to continue. I believe it is one of the best stocks to buy now and hold for a long time in my portfolio.
Jabran Khan has no position in any shares mentioned. The Motley Fool UK has recommended Fevertree Drinks. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.