With this in mind, today I’ve turned my attention today to Watford-based business Majestic Wine (LSE: WINE) whose stock has climbed roughly 50% in value in a little under a year. Can its owners be confident of toasting further gains?

“Making headway”

Today’s results certainly made for pleasant reading. Majestic reported a 2.3% rise in revenue to £476.1m over the 52 weeks to 2 April, supported by an 11.3% increase in underlying sales at its independent wine-making business Naked Wines. Despite performance at the company’s retail arm being somewhat less stellar — the 1.9% growth in sales “offset by foreign exchange pressures on margin” — the company reported a pre-tax profit of £8.3m compared to the £1.5m loss sustained in 2016/17.  

The good news didn’t stop there. Free cash flow jumped from £6.2m to £24.9m, allowing the company to approve a total dividend of 7.2p per share. This represented a 41.1% improvement on the previous financial year for a trailing yield of 1.6%. A serious reduction in net debt (from £25.7m to £8.4m) was also pleasing to see. 

Having reflected that the company was “making headway despite headwinds,” CEO Rowan Gormley cautioned that trading in the UK was likely to “remain tough, possibly even tougher than last year.” Nevertheless, the £320m-cap is still expected to hit full-year expectations, particularly as 20% of business occurs in the USA and Australia and 45% of total sales are generated online.

After a flat start, Majestic Wine’s shares moved higher, suggesting there could be more upside to come. Given its already frothy forecast P/E of 27 however, it’s probably not a stock I’d chase.

A cheaper option

Of course, there are other options out there. One example is Dublin-based drinks manufacturer and distributor C&C (LSE: CCR).

Shares in the mid-cap (which produces Bulmers and Magners) have been fairly volatile over the last year, falling from a high of around €3.30 to as low as €2.60 before recovering strongly at the beginning of April, coinciding with its purchase of distributor Matthew Clark Bibendum as Conviviality fell into administration.

Despite being in line with analyst predictions, May’s full-year results showed a near-5% fall in net revenue in the 12 months to the end of February compared to the previous financial year as the company faced a “challenging” trading environment (and weather disruption) in the UK and Ireland. Adjusted earnings before interest, tax, depreciation and amortisation also fell 6.3% to a little over €100m. On a more positive note, free cash flow rose from €58.3m to €70.8m with the company also reporting that its pension scheme has returned to a surplus of €1m compared to the €17.8m deficit in the previous year.

Changing hands at 11 times forecast earnings for the 2018/19 financial year, C&C’s stock should have appeal for value hunters. Based on its current price, a well-covered dividend of 4.8% is also expected — far more than you’ll get from Majestic Wines. With the Matthew Clark Bibendum acquisition likely to do the company no harm at all and recent trading looking solid, I’d be tempted to think that C&C might represent a better investment at the current time.

The post Is this high-flying small cap stock still worth the price? appeared first on The Motley Fool UK.

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Paul Summers 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.

At first glance C&C Group (LSE: CCR) may appear a tasty selection for those seeking brilliant dividend yields.

The brewing giant has consistently lifted dividends even in times of sustained earnings weakness (C&C has endured three bottom-line reverses on the spin), and the City does not expect either trend to cease just yet.

A 6% profits drop is forecast for the year ending February 2018, worsening from last year’s 3% decline. But despite this, a total dividend of 15.5 euro cents per share is anticipated, improving from 14.33 cents previously and yielding a very chunky 5.3%.

And supported by an anticipated 5% bounceback in fiscal 2019 the firm is expected to lift the dividend again to 16.1 cents, shoving the yield to a formidable 5.5%.

C&C’s half-year market update on Thursday certainly suggested that payouts should continue swelling. In it the Dublin-based business announced it was lifting the interim payout by 5% year-on-year to 5.21 cents.

Too much risk

Still, in my opinion, today’s trading statement had a lot more for investors to worry about rather than news to encourage fresh bouts of buying.

The company — whose products include Bulmers and Magners cider and Tennents lager — saw net revenues slip 6.8% during the six months to August, to €273.1m, a result that pushed operating profit 4.9% lower to €50.5m.

C&C noted that “volatile market conditions remain across the industry,” and that while its UK businesses have made a “solid” start to the second half of the year, “in Ireland, where the cider category remains highly competitive, trading has been marginally slower than expected.” The firm has also been negatively impacted by currency movements, it advised.

C&C’s sustained share price weakness (the brewer has lost more than 25% of its market value in the course of 2017) reflects this increasingly-difficult trading environment. And while the business is doubling-down on brand investment to stimulate sales and cost-cutting to shore up the bottom line, I reckon the drinks giant is a risk too far right now.

I would give C&C a wide berth despite its undemanding forward P/E ratio of 13.1 times.

Dividend yields set to balloon

Those on the hunt for darling dividend stocks would be much better taking a look at eSure Group (LSE: ESUR), in my opinion.

Unlike C&C, the car insurer and its peers are enjoying a steady improvement in market conditions as motor premiums continue their relentless northwards march.

Indeed, price comparison website Confused.com said earlier in October that policy costs had rocketed 14% over the past year, and that even worse is likely to come for Britain’s drivers — motorist editor Amanda Stretton commented: “There is every possibility that car insurance prices will be the most expensive on record during the first half of next year.”

It is hardly a shock, therefore, that eSure is tipped by City analysts to flip from an anticipated 5% earnings decline in 2017 to report a 13% improvement in 2018.

And this is expected to push dividends northwards again then, from a reduced 12.5p per share in the current period to 14.4p. These projections yield a very-decent 4.6% and 5.2% respectively.

I am convinced eSure should prove a brilliant bet for growth and income investors now and in the future.

The post Will these 5% yielders make or break your shares portfolio? appeared first on The Motley Fool UK.

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• Fresnillo share price rebounds as a FTSE 100 top mover after a 30% sell-off — what’s next?
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Royston Wild 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.

Why I like consumer goods

Consumer goods companies always attract me. Firms that produce consumable branded goods can generate steady cash flows as people love, use up and return repeatedly to buy more of the product.

With reliable incoming cash, directors of such firms can allocate funds to dividend payments and we often see a long record of rising dividends year on year. I think of consumer goods companies as ‘defensive’ because of such consistency.

The drinks sector

In the drinks sector two very popular firms are alcoholic beverage producer Diageo (LSE: DGE) and soft drinks supplier Britvic (LSE: BVIC). I know they are favourites among investors because the shares are expensive — quality businesses rarely sell cheap.

At a share price of 1748p, Diageo’s forward price-to-earnings (P/E) rating for 2016 runs at just over 19 and the dividend yield at around 3.3%. Growth, though, is modest, with City analysts expecting earning to lift only 1% that year.

Britvic’s rating is less rich. At a share price of 676p, the forward P/E rating for 2016 comes in at almost 14 and the dividend yield at around 3.6%. Meanwhile, analysts predict a 6% earnings’ improvement, which means Britvic looks set to fare better in 2016 than Diageo.

Of the two firms, Britvic looks the most attractively priced, but Diageo has the extra enhancement of producing products with alcohol content. The addictive nature of alcohol suggests even greater levels of defensiveness, as no matter how tough economic times become, people rarely forego their favourite tipple. That quality is not so obvious with the orange juice and other soft drinks produced by Britvic.

An alcoholic beverage producer on sale

There’s an opportunity to combine the attractive qualities of alcoholic products with a cheaper company valuation at C & C Group (LSE: CCR).

At a share price of €3.51, C & C Group’s forward P/E rating runs at just over 12 for year to February 2017 and the dividend yield at around 3.8%. City analysts following the firm think earnings will grow 4% that year.

The firm’s base turnover comes from cider and beer brands in Scotland and Ireland — brands such as Magners, Bulmers, Gaymers, Blackthorn and Ye Old English in the cider market, Tennent’s and Caledonia Best in the beer market, and non-alcoholic drinks such as Tipperary and Finches.

As we’ve seen, C & C sits on a lower valuation than Diageo and Britvic. Perhaps because the firm’s ‘Celtic’ heartland suffered a knock from tougher drink driving laws. However, the firm’s cider-led business is beginning to expand abroad in the US and Europe, and the Directors see great potential, particularly in America and they seem confident of modest earnings growth in the short term and a firming in the home market.

Turnaround and growth

I think C & C Group today is an attractive investment proposition. The firm trades at a modest valuation, yet retains all the defensive qualities of a consumer goods business. The dividend payout is covered more than twice by forward earnings, which means, if I bought shares now, a steady income could keep me company while I await the, so far, mostly unrealised potential abroad to mature into growth.

Directors seem to be firming up a turnaround and expansion plan and I’ve noticed several recent buys from investment institutions recently, which strikes me as a good sign. The big investors often quietly build there positions when firms languish on low valuations, off the radar for many, only to sell later when a growth/turnaround story gains wider acceptance and the shares and valuation has risen.

The post Why C & C Group plc Could Beat Diageo plc And Britvic plc On Total Returns appeared first on The Motley Fool UK.

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Kevin Godbold has no position in any shares mentioned. The Motley Fool UK has recommended Britvic. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Most consumer goods firms enjoy stable cash flow fuelled by brand-loyal customers repeat-purchasing, but the added attraction of alcohol’s addictive ‘qualities’ makes drinks providers such as Diageo (LSE: DGE) and SABMiller (LSE: SAB) seem even more ‘defensive’ as investments.

Good, but pricey

Steady business growth and rising dividends seem likely to reward investors in those two firms over the longer term. However, in the short to medium term there is some risk due to the companies’ elevated valuations.

Diageo’s forward price-to-earnings ratio (PER) runs at just over 19 for 2016 with the share price near 1863p and SABMiller’s at just under 20 with the shares around 3280p, yet City analysts expect only 7% and 8% growth in earnings per share next year, respectively. Forward dividend yields leave us wanting more, too. Diageo’s sits at 3.1% and SABMiller’s at a mere 2.5%.

So I’ve been looking at cider-led consumer beverage company C & C Group (LSE: CCR). The firm’s a tiddler with its £844 million market capitalisation compared to Diageo’s £47,459 million and SABMiller’s £53,542, but with the smaller size comes a lower valuation, which makes the firm an interesting investment alternative in the consumer-drinks space.

A niche operator

At a share price near €3.35, C & C Group’s forward PER runs at just over 11 for year to February 2017 and City analysts following the firm have earnings growth of 5% pencilled in for that period. The forward dividend runs at 4%, a healthy payout, which forward earnings cover just over twice.

In some ways, C & C operates like a mini SABMiller. Where SABMiller based its growth on beer brands and spread its wings from origins in South Africa to the rest of the world, C & C operates with cider brands in the ‘Celtic’ lands of Scotland and Ireland, and has yet to take over the world — but it has been trying, with a few disappointments so far, which could account for today’s ‘value’ rating.

You’ve probably heard of some of C & C’s brands; names such as Magners, Bulmers, Gaymers, Blackthorn and Ye Old English in the cider market, Tennent’s and Caledonia Best in the beer market, and non-alcoholic drinks such as  Tipperary and Finches. The firm reckons it exports to more than 50 international markets, but last trading year the majority of the firm’s revenue came from Scotland and Ireland. There was a 4.8% revenue contribution from North America and just 2.2% from other export markets.

Glass half-full or half-empty?

The firm took a knock in the US last year where increasing competition battered what was a growing market share. Significant write-downs resulted, and I think that’s one reason we see a value opportunity in C & C today. Does that mean it’s ‘game over’? I don’t think so. It’s hard to miss the increasing popularity of cider-brands in the alcoholic drinks market, so C & C is potentially well placed. The trouble in the US is that other firms noticed the trend as well, and swooped in for a piece of the action.

Yet the setback seems to have galvanised C & C’s directors into action and the firm is in the process of reworking its marketing and corporate strategy from the ground up. I love situations like this. C & C operates in an industry with an apparent tailwind and the directors are planning a turnaround. What’s more, the firm’s penetration of world markets is at an infant stage with all that growth potential still ahead, the company is in addictive consumer goods — a defensive sector — and to top it all, we see the shares presenting on a ‘value’ rating. C & C is going on my watch list with a view to deeper research.

The post Why C&C Group PLC’s Valuation Beats Diageo plc’s And SABMiller plc’s appeared first on The Motley Fool UK.

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• Diageo shares just can’t catch a break! Here’s a major new risk
• £5,000 invested in Diageo shares 1 month ago is now worth…

Kevin Godbold has no position in any shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

C&C Group: Uninspiring

Another disappointing trading update from C&C. Its stock, down almost 3% in early trade, is not far off its multi-year lows. Its forward trading multiples based on net earnings and cash flows are rather low, but first-quarter results released today showed that its growth trajectory remains a problem.

“Trading conditions in the first quarter were mixed“, the booze maker argued. The business boasts a decent capital structure, so its forward dividend yield (3.5%) looks safe, although forecasts for cash flow growth into 2017 are not particularly appealing. You may want to wait a bit longer to sell it if you are invested, betting on stronger trading conditions in the second half of the year. 

Low & Bonar: Taking Profit

Its stock lost almost 3% of value in early trade: it looks like investors are taking profit after a six-month performance that reads +36%. Its half-year results for the six months to 31 May 2015 showed that profits and returns are up but revenues are down, hit by currency swings, which are set to last in my view.

Its forward trading multiples are not prohibitive, but the shares of this supplier to the performance materials industry, which offers an appealing forward yield at 4% (well covered by core underlying earnings), may find it more difficult to rally into the second half of the year from this level. 

Persimmon: A Star Performer 

Its stock is flat at the time of writing, but has risen 30% year to date. The sector is hot property and is my favourite homebuilder based in the UK. Trading metrics and fundamentals suggest that the rally may well continue into the second half of 2015 and beyond; with Persimmon, you’d bet on rising earnings, a stellar dividend and cash returns to shareholders. 

It updated the market today on its half-year results to 30 June 2015: new home legal completion volumes increased by 7% to 6,855 units (2014: 6,408); revenues increased by 12% to £1.34bn (2014: £1.20bn); visitor numbers to sites across the UK “have been in line with the prior year” while “cancellation rates have remained at low levels”. It added that customer demand has been favoured by an increasingly competitive mortgage market since early 2015, and that combines with favourable macroeconomic conditions. The average selling price for increased by 4% to about £195,000 (2014: £186,970).

Hunting: Ready To Buy Volatility?

Its stock was down as much as 6% at the time of writing, and is down almost 30% over the last 12 months. 

At its current price, you may be tempted to invest in it. Just as Hunting said in its trading update today, “the outlook continues to remain unclear, however, weekly rig count declines have slowed, some divisions have seen improvement in enquiries/order book and customer sentiment is improving due to their view of oil prices and their reduction in operating costs”. 

To be honest, Hunting may well be an opportunistic trade, but fundamentals and forward trading multiples suggest that you’d likely add volatility to your portfolio if you decided to pick it up right now. 

Premaitha Health: The Outlier  

A tiny company with a market cap of about £40m, Premaitha Health announced today the placing of about 40m of new ordinary shares at a price of 20p (some 21.3% of its existing stock).

The £8m issuance pushed the stock down 11% to 21.2p; proceeds will be used to fund existing products, growth opportunities and working capital. One of the highlights from its previous trading update on 19 June was the launch of the “first and only CE-marked in-vitro diagnostic non-invasive prenatal test (NIPT) in February“, which the group said it would position it at the forefront of the emerging NIPT sector in Europe.

Back then, it reported operating losses for the financial year ended 31 March 2015 in the range of £4.9m-£5.3m (on the back of additional “development activities of £1m-£1.2m and a provision for litigation costs of £0.5m“), while cash held on the books stood at £2.6m (30 September 2014: £5.2m).

The post Should You Buy Or Sell C&C Group PLC, Low & Bonar plc, Persimmon plc, Hunting plc & Premaitha Health PLC Today? appeared first on The Motley Fool UK.

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Alessandro Pasetti has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.