Covid-19 restrictions will soon start to be lifted and my portfolio and I are beginning to feel quite thirsty. So, I’ve decided to look at what I think are the two best UK beverage stocks on the market right now. I’m not looking for the best small beverage stocks to invest in, but rather some bigger businesses that I believe are worth investing in now.
I was only made aware of Naked Wines (LSE: WINE) last year when the coronavirus first struck. This forced me to resort to home drinking and to order online. The company killed both of these birds with one stone, making it a very interesting UK beverage stock for me.
The Naked Wines share price has fallen sharply from the record peaks above 800p struck in February. But now it’s rising once more and remains up 186% in the past year as of market close on 6 April, rising from 268p to 765p.
Ahead of its full-year results due on 15 April, any dip in the price could be a great buying opportunity for me. I hope this report will be a timely reminder of just how well the company has fared in the past year. Its most recent financials showed a near-80% rise in revenue (to £157.1m) for the six months to 28 September, giving it a P/E ratio of 41.5. This is thanks to strong demand from both new and repeat customers.
The pandemic showcased just how simple and effective a service Naked Wines can provide. However, pub and restaurant reopenings around the world could damage its share price as consumers flock back to such venues so that’s a risk I have to bear in mind if I buy now. That’s especially so as the share is clearly expensive already and is priced to continue performing strongly. If it fails to meet lofty expectations, the price could fall.
When buying strong UK beverage stocks for my portfolio, I also think I need to look no further than Coca-Cola HBC (LSE: CCH). This strategic partner of the Coca-Cola Company bottles and distributes its products in 28 countries. Naturally, it took a hit in 2020 as restaurants and bars closed, and travel and events ground to a halt. Sales fell 12.7% to €6.1bn.
But a successful vaccination programme leading to reopenings across the UK is promising. I think it could be a good time for me to add this stock to my portfolio. I’m looking forward to actually drinking outside of my flat for the first time in months and other consumers are likely to be feeling that way too. “We expect to see a strong FX-neutral revenue recovery in 2021,” the company said recently. And analysts expect revenue growth of 8.3% and 6.7% for FY21 and FY22, respectively.
Coca-Cola HBC is currently priced at 2,360p, up 21% in the past year from a price of 1952p, and giving it a P/E ratio of 24.
This ‘reopening’ stock isn’t without significant risks though, especially considering the rapidly growing infection rates in Europe and other countries. This could throw a spanner in the works of any plan to get the world back to normal. As with Naked Wines, it’s also expensive. But I hope that its current upward trajectory will continue, especially as this UK beverage stock is still around 20% off of its all-time highs.
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The Motley Fool UK owns shares of Naked Wines. 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.