Premium content from Motley Fool Share Advisor UK
Our monthly Ice Best Buys Now are designed to highlight our team’s three favourite, most timely Buys from our growing list of income-focused Ice recommendations, to help Fools build out their portfolios.
“Best Buys Now” Pick #1:
A G Barr (LSE: BAG)
- Part-family-owned soft drinks business that has an attractive brands portfolio.
- It grew like-for-like sales by 15.9% in its latest fiscal year.
- It’s seeing impressive momentum from its Funkin brand, the UK’s leading ready-to-drink cocktail brand, which has been growing revenues by 16%.
- The company says that 9.6m UK consumers drink cocktails out of home, a 1.6m increase since the pre-pandemic period, which has helped the category increase by 13% to £686m since 2019. This looks like a growth avenue for the company.
- The recent acquisition of Boost “has performed exceptionally well”.
- While operating margins have declined from 14.9% to 13.6% due to inflationary cost pressure and higher investment, the company believes it can rebuild margins over the medium term.
- It’s currently trading at around 16x forecast earnings, a discount to the three-year average of closer to 20x.
