If I were to start building a portfolio of FTSE stocks from scratch, I reckon Britvic (LSE: BVIC) and Domino’s Pizza Group (LSE: DOM) would be two top candidates to start with! Here’s why!
Britvic
Britvic is one of the largest drinks producers in the UK. You may be familiar with some of its popular brands, including Robinsons, J20, and Fruit Shoot, to mention a few.
This impressive brand power is supplemented by Britvic’s exclusive and lucrative agreement to bottle and distribute PepsiCo products in the UK.
Over a 12-month period, the shares are up 15% from 764p at this time last year, to current levels of 886p.
Britvic has experienced excellent organic and acquisition-led growth in recent years. This shows no signs of slowing down, based on recent updates.
This has led the FTSE 250 incumbent being able to regularly reward investors. A dividend yield of 3.6% today looks attractive to help boost passive income. However, it’s worth remembering that dividends are never guaranteed.
Plus, the shares look attractive on a price-to-earnings ratio of 17. A business with a good track record, passive income, as well as spectacular brand power, sometimes costs a fair price.
From a risk perspective, recent volatility such as increased costs and a cost-of-living crisis could hurt Britvic. Rising costs could take a bite out of profit margins. Plus, with consumers looking to tighten their belts, non-branded alternatives could be a better option, in the short term at least.
The rewards outweigh the risks by some distance. As an experienced investor, I’d also be willing to buy some shares for my holdings when I next have some capital available.
Domino’s Pizza
Domino’s savvy franchise model, whereby growth is able to accelerate quickly without compromising on quality standards, has catapulted it upwards. Plus, it shows no signs of slowing just yet.
Over a 12-month period, the shares are up 12% from 314p at this time last year, to current levels of 353p.
Domino’s has been growing its market shares in recent years in the UK. A big part of this is due to its heavy investment in digital channels, such as its app. It now makes a hefty chunk of its sales through this. Furthermore, the firm continues to open new stores at a rapid rate which should help boost shares and investor returns.
Speaking of returns, a dividend yield of 2.8% and a valuation on a P/E ratio of just 12 is extremely attractive, in my opinion. I wouldn’t be surprised to see Domino’s level of return grow in line with the business.
Similarly to Britvic, current rising costs could hurt Domino’s demand and performance. Plus, continuing to open new stores doesn’t mean demand is increasing or they can all perform well. I’m confident those at the top know what they’re doing but pizza and takeout is a saturated market. I’ll keep an eye on trading updates to understand the impact of these new locations.
I’m excited to see where Domino’s Pizza shares could go, especially as it continues to expand into European locations through clever franchising. Like Britvic, I’d buy some shares when I next can.
