I’d buy this UK big-cap stock in July without hesitation

I think this UK stock is one of the best opportunities in the FTSE 100 and it looks like a good time to focus on it right now.

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One UK big-cap stock stands out to me as an appealing opportunity.

Sadly, all my funds are invested. But with spare cash, I’d research this one first.

It’s in the FTSE 100 large-cap index. So this is not a highly speculative bet. But the company has been delivering steady and rising earnings and dividends for some time.

Just lately the share price has eased back a bit, and because of that, I reckon it’s a good time to focus on the company — right now, in July.

The stock in question is Coca-Cola HBC (LSE: CCH). The firm describes itself as a growth-focused consumer packaged goods business and strategic bottling partner of The Coca-Cola Company.

There’s a simple assumption I’m making here — if the Coca-Cola brand does well, Coca-Cola HBC will likely do well on its coat tails.

A big market

Coca-Cola HBC enjoys exclusive rights to bottle and distribute the product over a wide territory of around 29 countries across Africa, Europe, and Asia. But the mother business retains responsibility for all the marketing, promotion, and advertising.

What a decades-long success story that’s been, so far. One famous fan of the brand is billionaire super-investor Warren Buffett. And why wouldn’t he be? Via his holding company Berkshire Hathaway, he’s made many millions by owning The Coca-Cola Company stock with great patience and a long-term mindset.

Meanwhile, as well as Coca-Cola itself, sub-brands and other names are driving the Coca-Cola HBC’s success. The firm’s stable reads like an A-list of celebrities in the fast-moving consumer goods space for drinks — for example, Fanta, Sprite, Schweppes, Costa Coffee, Monster Energy, Finlandia Vodka, The Macallan, and Jack Daniel’s among others.

There was an upbeat first-quarter trading update in late April. The company said it had enjoyed a strong start to the year and was on track to hit previous guidance.

City analysts following the firm have pencilled in steady single-digit percentage progress this year and next for earnings and the dividend. They even expect growth in 2025’s earnings to hit double figures.

A reasonable valuation

Meanwhile, with the share price near 2,686p, I don’t think the valuation looks excessive. Against those analysts’ estimates, the forward-looking earnings multiple is around 11 and the anticipated dividend yield is about 4%.

Putting my money in a Footsie index tracker wouldn’t give me a deal as good as that. The index has a forward P/E rating near 13.5 and expects to yield 3.5% from dividends.

Nevertheless, investing in the shares of individual companies always adds an extra layer of risk. That’s true even if the fundamentals and the valuation of the underlying business look attractive, as this one does to me.

So, what could go wrong? Well, it’s possible for a general economic downturn to arrive with enough power to render brand strength ineffective. Or, a catastrophe scenario may involve the bottler losing its exclusive rights to deal in Coca-Cola’s products. Or perhaps trends towards health-conscious living may gradually cause the brand to lose its appeal.

All those things are possible. But I’d be inclined to shoulder those risks and research the stock opportunity now, while the share price is weak.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

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