The Motley Fool

FTSE 250 stock in focus: is Britvic among the best shares I could buy now?

Image source: Getty Images

UK shares are having a rough week, but FTSE 250 drinks manufacturer Britvic (LSE:BVIC) issued an upbeat trading update with improved profit guidance for the year. Sales over the summer were particularly good, and it’s embarking on an exclusive bottling agreement with PepsiCo. This 20-year agreement extends a well-established relationship since 1987. It gives Britvic the right to produce, distribute, market and sell Pepsico soft drink brands throughout the UK in a franchising capacity. So could Britvic be among the best shares to buy now?

Throughout the summer and autumn, nationwide restrictions have encouraged shoppers to buy more of Britvic’s offerings for drinking at home. Whether this will continue once normality resumes is unclear. However, Britvic remains confident in its ability to invest and grow throughout 2021. I think this is reassuring, and the defensive nature of its dependable products gives me optimism for its future. 

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Debt, sustainability goals and growth

In an encouraging sign for shareholders, the FTSE 250 group is also working on reducing its net debt. It hopes its year-end adjusted net debt balance will come in at £40m-£50m lower than last year.

With pressure on companies to improve sustainability and planet protection, Britvic is on a mission to comply. It plans for all its UK manufactured plastic bottles to be made from 100% recycled plastic by the end of 2022. This is a big improvement on its previous target.

I like its business model, and the products it sells. I also think Britvic has enough of a selection of drinks to give it long-term strength. At the time of writing, Britvic has a price-to-earnings ratio (P/E) of 25, which is quite high. This could be off-putting if it weren’t the norm these days for solid-looking companies to have a relatively high P/E. Earnings per share are 30p, and its 3.9% dividend yield remains on hold.

Fluctuating share price

The Britvic share price is down 12% year-to-date but has risen 44% since its March market crash low. The FTSE 250 stalwart IPO’d back in 2005 with a share price around £2.10. Investors buying back then, who still hold the shares today, will have made a 275% gain, despite the intermittent fluctuations. This is the beauty of lifelong investing. By following a buy-and-hold strategy, the share price ups and downs can largely be ignored, and any dividends reinvested for capital accumulation and compound gains. 

I think Britvic is a solid company, producing a range of drinks that people know and like. Consumers still need to drink and will continue to buy the brands they love. In its recent update, management indicated it would continue marketing and bringing out new products in 2021.

I think management knows how to give people what they want and will adapt as necessary to continue to grow. So yes, I do think it could be among the UK’s best shares to buy now. I like what I see, and I’d consider adding it to a long-term portfolio.

Are you looking for growth prospects to boost your earning potential? Experts like The Motley Fool (and their exclusive reports) are here to boost your chances of making money through investing. Let them help you...

A Top Share with Enormous Growth Potential

Savvy investors like you won’t want to miss out on this timely opportunity…

Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this ‘pure-play’ online business (yes, despite the pandemic!).

Not only does this company enjoy a dominant market-leading position…

But its capital-light, highly scalable business model has previously helped it deliver consistently high sales, astounding near-70% margins, and rising shareholder returns … in fact, in 2019 it returned a whopping £150m+ to shareholders in dividends and buybacks!

And here’s the really exciting part…

While COVID-19 may have thrown the company a curveball, management have acted swiftly to ensure this business is as well placed as it can be to ride out the current period of uncertainty… in fact, our analyst believes it should come roaring back to life, just as soon as normal economic activity resumes.

That’s why we think now could be the perfect time for you to start building your own stake in this exceptional business – especially given the shares look to be trading on a fairly undemanding valuation for the year to March 2021.

Click here to claim your copy of this special report now — and we’ll tell you the name of this Top Growth Share… free of charge!

Kirsteen has no position in any of the shares mentioned. The Motley Fool UK has recommended Britvic. 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.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.