AG Barr

AG Barr (LSE:BAG) makes some of the country’s most beloved drinks. We’re talking about the likes of Irn Bru, Rubicon, and Rio, which remain in popular demand across the economic cycle.

But this FTSE 250 company isn’t a boring defensive play for portfolio strength. It’s delivered sustained double-digit earnings growth in recent years, a record City analysts expect to continue.

Barr’s bottom line is tipped to rise 11% this financial year (to January 2026). Another 8% annual increase is expected in fiscal 2027.

So what’s driving this momentum? Pricing actions have paid off handsomely, and in the six weeks to July, revenues were up 3.1%. Combined with its improving grip on costs, price hikes have given margins a huge shot in the arm — Barr’s adjusted operating margin surged 200 basis points in the first half, to 15%.

The drinks giant is also effectively capitalising on fast-growing product segments. Sales of its Boost energy drinks rose by double-digits between February and July.

Barr faces intense competitive pressures and tough conditions for the UK consumer. As a result, price forecasts for Barr shares for the next 12 months aren’t unanimously bullish. The least optimistic broker in fact is tipping a 12% drop from current levels.

However, the view among eight analysts with ratings on Barr is largely upbeat, creating an average forecast of 756.9p per share. That’s up 13% from today’s levels.

NCC Group

Tech shares like NCC Group (LSE:NCC) can be especially vulnerable during economic downturns. Yet I’m confident this FTSE 250 company’s focus on essential cybersecurity services should help it weather any difficulties.

So are City analysts. They think the share will report earnings increases of 18% and 16% in financial 2026 and 2027 respectively.

NCC operates in a highly competitive industry, and is up against bigger beasts with deeper pockets to fund product development. But its expertise in areas like attack simulations is helping it take the fight to its rivals. March’s trading update indicated that it continues to enjoy “strong pipeline growth“.

Sales have been under the cosh more recently, and cyber security sales dropped 6.6% at constant currencies in the six months to March. NCC said this reflected lower “high-volume, lower value testing and compliance engagements” due to macroeconomic uncertainties.

But the business is taking action to turn itself around and better deliver long-term growth as the market booms. This includes focusing on higher value operations with long-term recurring revenues in areas like identity management and advanced testing. It’s also overhauling its global delivery model and expanding teams in key Asian markets.

The six analysts with ratings on NCC all believe this growth share will rise in value over the next year. The average price target is 175.2p per share, representing a 20% premium to current levels.

The post Prediction: analysts say these growth shares will surge 20% and 13% in a year! appeared first on The Motley Fool UK.

Yet, those concerns need to be taken seriously. Rising inflation and signs of economic slowdown are troubling on their own. With fiscal challenges in Western economies mounting, and war threats rising in Europe and the Middle East, the outlook for markets is especially precarious.

A stock market crash is by no means certain, of course. But it pays to be prepared, by reviewing one’s portfolio for risk, and by building a list of stocks to buy if equities retrace. While unnerving, price corrections also provide some of the best opportunities to buy great companies on the cheap.

Here are two stocks I’ll look at buying if share markets plummet.

AG Barr

AG Barr‘s (LSE:BAG) shares have risen 10% in the year to date. This means they change hands on a forward price-to-earnings (P/E) ratio of 16.1 times.

That’s above a reading of roughly 13 times for the broader FTSE 250. And it’s a premium I’m not willing to pay right now.

Barr makes some of the UK’s most popular soft drinks like Irn Bru and Rubicon. They benefit from exceptional brand power that keeps them in high demand even during downturns. Indeed, latest financials showed revenues up 3.1% in the six months to July, even as broader pressure on consumers’ wallets endured.

The drinks maker can therefore be a great stock to buy to enhance a portfolio’s robustness. Having said that, I am concerned about its growth prospects compared to rivals like Coca-Cola CCH, given its lack of a significant international presence.

For this reason, I’m happy to sit on the sidelines for the moment.

Clarkson

Clarkson‘s (LSE:CKN) share price has headed in the oppositive direction in 2025, down 7% since 1 January. Trade tariffs have exacerbated economic pressures and regional conflicts have emerged, causing weakness across the shipping market.

It’s perhaps no surprise that the shipbroker has slumped in value. It’s a drop that’s caught my attention, but not roused my appetite to consider opening a position. A forward P/E ratio of 17.3 times is still a bit high for me given ongoing risks.

I’ll take a fresh look if Clarkson’s shares reverse again, however. As the world’s largest shipbroker, it’s in pole position to capitalise on improving trade flows when the economy picks up. A dearth of new shipping supply in recent years will give freight rates a huge shot in the arm too when the recovery happens.

The FTSE 250 company also stands to capitalise from the rapid energy transition. This is driving segments like LNG carriers and vessels that support offshore wind farms, and provides significant long-term earnings opportunities.

The post 2 stocks I’ll look to buy in the event of a stock market crash appeared first on The Motley Fool UK.

The underlying business, however, has exceeded my expectations. So should the stock still be on my list of shares to buy in October?

Growth

AG Barr’s earnings per share (EPS) during the first half of 2024 were 19.86p. On Tuesday (30 September), the firm reported EPS of 24.9p for the first six months of 2025, implying 25% growth.

A key reason for this has been wider operating margins. The company has been working on the integration of its acquisition of Boost and the results of this are starting to show up.

This was a key part of my investment thesis a year ago. Under its previous management, AG Barr was aiming for 14.5% operating margins by 2026, but it’s well ahead of schedule.

In the first half of the year, the firm’s operating margins were 15%. But 25% growth in earnings per share has only translated into a 6% increase in the company’s share price in the last 12 months.

Valuation

The business is ahead of what I expected, but the share price hasn’t responded in the way I anticipated. While net income has grown, the multiple the stock trades at has contracted.

A year ago, shares were trading at a price-to-earnings (P/E) multiple of around 18. And I had expected 25% EPS growth to cause this to expand to around 20, pushing the stock higher.

After the latest results, however, the stock trades at a P/E ratio below 16. Investors are taking the view that margins can’t expand forever and are focusing on other metrics – such as sales growth.

In the most recent update, this was only 3%. And that’s why the stock has been falling despite the company posting the kind of EPS growth that investors might expect from US big tech firms.

What should I do?

A P/E ratio of 16 is towards the lower end of the range AG Barr shares have traded in over the last few years. But I think it reflects something important about the company’s growth prospects.

It looks as though the boost to the firm’s profits generated by its big acquisition is now reflected in its current earnings. So the question is where future growth is going to come from.

Higher sales don’t seem to be the answer and while the business has cash available for further acquisitions, this is risky. As a result, a P/E ratio of 20 now looks optimistic to say the least.

Given this, I don’t think the stock is likely to reach £7.80 in the next year or so. And I’m looking elsewhere right now in terms of buying opportunities. 

Final thoughts

AG Barr has achieved its margin targets ahead of schedule. While this is impressive and has had a big effect on its bottom line, the stock hasn’t responded as I expected.

On reflection, I think this is entirely reasonable. With long-term growth looking much more limited from here, investors are understandably wary about assigning a high multiple right now.

The post This FTSE 250 stock is 18% below my price target. Should I buy it in October? appeared first on The Motley Fool UK.

I have a few ideas in mind, but there are a couple that I’m set on in the absence of any major issue that might crop up. And both are firmly in the category of growth stocks.

Bunzl

When shares in Bunzl (LSE:BNZL) fell 14% in the first half of March, I started buying the stock for my portfolio. But – as is always the way – I didn’t manage to get as much as I’d have liked.

On the face of it, 2024 wasn’t a great year for the FTSE 100 distribution company. Revenues fell 0.4%, which isn’t what investors look for in a growth stock. This however, was largely due to the firm passing on lower prices from suppliers. As a result, operating profits grew 2.2% on an adjusted basis.

Looking ahead, I’m impressed by Bunzl’s plans for growth. It’s aiming to invest £700m a year into a combination of acquisitions and shareholder returns.

Attempting to grow in this way brings the risk of destroying shareholder value by overpaying to acquire a business. But the company operates in a fragmented market, which should help. 

This doesn’t entirely eliminate the risk and investors will want to see returns on equity staying strong over time. At today’s prices though, I’m looking to add to my existing Bunzl investment.

AG Barr

The soft drinks market doesn’t stand out as a particularly growth-focused industry – and it isn’t. But I think AG Barr (LSE:BAG) has a number of growth opportunities in front of it.

The most obvious is its revenues, which are forecast to increase by 4.2% a year on average between now and 2028. That doesn’t sound like much, but it isn’t the only source of growth.

Another key opportunity is operating margins. These have reached 12.5%, but are expected to keep expanding as the company completes its integration of Boost Drinks Holdings.

On top of that, there’s a rising dividend. That means investors have three clear sources of growth and I don’t think this is adequately reflected in a price-to-earnings (P/E) ratio of 17.5.

Arguably, what is reflected in the share price is rising costs. With UK inflation set to rise, expanding margins won’t be entirely straightforward and that’s a risk for investors to consider.

I think AG Barr’s core brand – Irn Bru – should give it some protection against this, but we’ll see. In any event, I see the stock as a bargain and I’m looking to add it to my ISA in April.

Growth stocks

When it comes to growth stocks, the UK isn’t the first place most investors look. And there’s clearly some justification for this. Nonetheless, I think there are some very attractive opportunities in places that are going unnoticed. That’s where I’m looking to concentrate my investing in April.

The post 2 UK shares I’m buying in April appeared first on The Motley Fool UK.

Still popular among investors today, five of Fool.co.uk’s free-site writers have put forward alternative British-based stocks for investors to consider…

AG Barr

What it Does: AG Barr is a drinks company. It’s best known for Irn Bru, but has recently acquired Boost! product range.

By Stephen Wright. The AG Barr (LSE:BAG) share price has been up and down recently. But when it’s down – ideally somewhere near the 600p mark – I like it a lot better than I like Greggs shares.

Put simply, I think I can see better growth prospects for the maker of Irn Bru than I can for the business that sells sausage rolls. The key is its recent acquisition of Boost Holdings.

AG Barr has been working to integrate the business over the last couple of years. And I expect the expansion in margins that has already begun to carry on from here.

With Greggs, I think the future is less clear. Recent growth has been largely driven by new store openings and I’m uncertain as to how long this can continue. 

Inflation is a risk for AG Barr – higher packaging costs creates a challenge for expanding margins. But from an investment perspective I prefer it to Greggs at the moment.

Stephen Wright does not own shares in any company mentioned.

Associated British Foods

What it does: Associated British Foods is a highly diversified group, with a range of food, ingredients and retail businesses.

By Andrew Mackie. Greggs might have carved itself a unique position on the high street, but I much prefer FTSE 100 stalwart Associated British Foods (LSE: ABF). And believe it or not, it also has a bakery division, through its leading Kingsmill brand.

The beauty about the company is its unique diversified business model. Most individuals associate it with just retail, through its ownership of Primark. But its way more than that. A motley collection of different businesses makes it extremely resilient during the course of the business cycle.

At the moment, the high street is struggling. Primark isn’t immune to that. Consumers are cautious with shrinking disposable incomes. But unlike one trick pony Greggs, revenues have been increasing in its ingredients segment, which include speciality enzymes used in manufacturing and pharmaceuticals.

I accept that its share price has hardly been a star performer measured over years. But viewed over 20 plus years, it’s been a multi-bagger. And that doesn’t include the handsome dividends along the way. I have been a part owner for years, and will be for many more to come.

Andrew Mackie owns shares in ABF.

Barclays

What it does: Barclays is a well-known Tier 1 bank, serving both private and corporate clients across the world.

By James Beard. Although I’m a fan of Greggs, I believe the baker’s scope for future growth is limited, primarily due to its 100% domestic focus.

I prefer Barclays (LSE:BARC), which earns 48% of its revenue from outside the UK. Its global reach helped increase the group’s 2024 post-tax earnings by 19.4%.

I also think the global demand for banking services is likely to outstrip that for pies and sausage rolls.

However, banking stocks can be volatile. And (unlike me) Barclays’ directors seem to prefer share buybacks to dividends. Its sub-3% yield is a little disappointing.

But the bank’s targeting an increase in its return on capital from 10.5% (2024), to 12% (2026). Also, analysts are forecasting a 42% rise in earnings per share over the same period. With a forward price-to-earnings ratio of around six, the stock looks cheap to me.

For these reasons, I’m happy to have Barclays in my portfolio.

James Beard owns shares in Barclays.

Coca Cola HBC

What it does: Coca Cola HBC is a bottling partner for Coca-Cola, producing and selling drinks across 28 markets in Europe, Africa, and Eurasia.

By Ben McPoland. While Greggs has a strong brand and position in the UK, it only operates on these shores. Therefore, it’s fully exposed to the UK economy, which is beset by low growth and high inflation.

In contrast, Coca Cola HBC (LSE: CCH) from the FTSE 100 operates in various international countries, selling brands like Coca-Cola, Fanta, Schweppes, Sprite, and Monster.

These markets include established ones like Greece, developing economies such as Poland, and emerging markets like Nigeria and Egypt. In my eyes then, the company has higher future growth potential than Greggs.

In 2024, organic net sales rose 13.8% year on year to €10.7bn, while organic operating profit was up 12.2% to €1.2bn. The dividend was hiked 11% to €1.03 per share, with the well-covered forward yield sitting at 2.9%.

A spike in inflation is a risk, as this could see people downtrading from branded drinks. A boycott of US brands from Muslim consumers in Egypt and Bosnia is also worth watching.

Long term however, I think this reasonably-priced stock will continue to do well (it’s up 35% in a year, as I type).

Ben McPoland owns shares in Greggs and Coca Cola HBC.

TP ICAP

What it does: TP ICAP is a global interdealer broker that facilitates trades in financial, energy, and commodities markets.

By Mark Hartley. TP ICAP (LSE: TCAP) acts as an intermediary between financial institutions, such as investment banks and hedge funds. It helps organisations execute transactions in products like bonds, derivatives, foreign exchange and commodities.

It generates revenue primarily through commissions on trades, leveraging market volatility to its benefit. Consequently, revenue declines during periods of low trading volume, which can hurt the share price. It’s also at the whim of increasingly strict financial regulations, which could lead to costly business adaptations and revenue loss.

To meet this demand, it’s recently expanded into electronic and data-driven services, making it better positioned to benefit from evolving financial markets. Financial services is the largest industry in London and one of the fastest growing in the UK. For TP ICAP, the results are already evident, with the share price up solidly44% in the past year. It also pays a handsome dividend with a yield of 5.7%.

Mark David Hartley owns shares in TP ICAP.

The post 5 British shares these Fools like more than Greggs for the long term appeared first on The Motley Fool UK.

The trouble is, it’s been at this level before and I’ve always thought there were better opportunities for me elsewhere. But I think there’s a very strong case to be made for considering it at today’s prices.

Investment thesis

The core of my investment thesis for AG Barr is simple – I think earnings per share (EPS) are heading towards 39p in the next 18 months. And if that happens, I think the stock is undervalued.

My actual price target for the stock is around £7.88. This is based on 39p in earnings per share and a price-to-earnings (P/E) ratio of 20, which is roughly its historic average. 

That’s around 33% higher than the stock’s current level and it doesn’t include anything in terms of revenue growth or dividends. It’s where my margin of safety comes from. 

The stock currently trades at a P/E multiple of 18.5, but I’m expecting this to increase if profitability increases. The big question, though, is are margins going to expand?

Integration

In 2022, AG Barr acquired BOOST Drinks Holdings in a deal worth £20m. The impact on revenues was immediate – since then, sales increased from £269m to £411m. 

Profits, however, have taken longer to catch up. Costs have been incurred during the integration process and operating margins fell from 15.6% to 12.3% as a result.

At the start of last year, however, the company indicated that margins should reach 13.3% by January of this year and 14.5% in 2026. And the latest report showed good progress in this regard.

AG Barr’s January update reported margins of 13.5%, putting the company ahead of schedule. But the stock is roughly back where it was last July, which looks like my opportunity. 

What could go wrong?

Given the fact that Irn Bru is somehow both wildly popular in Scotland and desperately difficult to export anywhere else, I’m not that worried about US tariffs. That might be a mistake, but I’m relaxed.

A bigger concern, in my view, is the possibility of inflation. Since my thesis for AG Barr is focused on the company’s ability to expand its margins, higher input costs are the most obvious threat.

There’s not a lot the company can do to try and ward this off. I think the best move for investors is to try and look for a margin of safety in the share price in case things don’t go to plan.

I think that’s there at the moment. With a potential 31% gain even with no contribution from revenue growth or dividends, the stock looks very attractive to me anywhere below 600p. 

Is this my time to buy?

Last time shares in AG Barr were at this price, I missed out because a there were other investments that I thought were more attractive. But I’m hopeful to avoid this happening again.

With share prices falling, a lot of stocks that have made their way on to my buying radar recently. However, if the AG Barr share prices stays below 600p, it’ll be the next stock I buy.

The post Is it finally time for me to buy this FTSE 250 stock? appeared first on The Motley Fool UK.

Despite this, I’m setting my sights on the UK stock market. At times like this, I think there are some great opportunities for investors – with a couple of caveats.

Survival of the fittest

Higher taxes and National Insurance contributions are going to challenge UK firms. But I think the best businesses – those that have lower costs or the ability to increase prices – will cope better than others.

As a result, I expect some companies to find themselves in a stronger competitive position a couple of years from now. And this could be a very good thing from a long-term perspective.

I think investors might overlook this point in some cases. And this could create some outstanding investment opportunities.

I’m therefore aiming to identify businesses that can weather the immediate storm and emerge in a stronger position for the long term. And there are a couple of stocks on my radar right now. 

Howden Joinery Group

Howden Joinery Group’s (LSE:HWDN) a business I think has a huge long-term advantage. The firm’s big strength is its ability to charge customers less while making more money itself – a win for all parties.

The foundation of this is its trade-only sales strategy. This means it can operate out of warehouses and this brings down costs significantly, with no need to lease (or buy) expensive retail showrooms.

The results show up in the company’s profitability. Howden consistently manages operating margins above 15%, which is significantly higher than the likes of Kingfisher (6%) or Wickes (5%).

Howden Joinery Group vs Kingfisher vs Wickes Operating Margins 2015-24

Created at TradingView

This doesn’t make the firm immune to the effects of an economic downturn – and this is a key risk. But it should mean the business is more resilient in a difficult environment and emerges stronger as a result.

AG Barr

Another business I think could be unusually resilient is soft drinks producer AG Barr (LSE:BAG). In addition to higher costs, the firm’s also facing challenges from the rise of GLP-1 drugs that might threaten sales volumes. 

This is a risk, but I think the company’s main brand puts it in a stronger position than its rivals. There aren’t many drinks that can compete with Coca-Cola, but Irn Bru has shown itself to be one of them. 

AG Barr’s latest update offered investors a clear demonstration of this. Revenue grew 5.2% and a lot of this was the result of increasing prices without significant declines in sales volumes.

Not every business can do this. So while short-term challenges might limit profit growth in the near future, I expect long-term shareholders should benefit from a stronger competitive position.

Quality and value

Howden’s and AG Barr are two UK stocks I’m looking at right now – but they aren’t the only ones. There are several businesses I think could emerge from a difficult trading environment in a stronger position.

Investors looking to buy shares in quality companies at attractive prices should consider the UK stock market. Not everything looks good to me, but I think there could be some good opportunities.

The post Why I’m looking to buy FTSE 100 and FTSE 250 shares right now appeared first on The Motley Fool UK.

Some businesses are more resistant to the effect of higher prices than others. And in general, those are the companies that are able to differentiate themselves from their competitors.

Differentiated distribution

FTSE 100 industrial conglomerate Diploma (LSE:DPLM) offers a service its customers can’t get anywhere else. It combines the benefits of a huge scale with close attention to individual customer needs.

One of the company’s big points of differentiation is the size of its inventory. When its customers need a part for a machine, it’s typically urgent and Diploma gives them the best chance of finding it in a hurry.

Providing a service customers can’t get elsewhere is a good thing when it comes to fending off the effects of inflation. But there are risks investors should consider.

One is the potential of inflation gives way to an economic downturn if interest rates rise. That could cause the rate of sales growth to slow, which is already happening to some extent.

Diploma annual revenue growth 2020-2024

Created at TradingView

The risk for investors is exaggerated by the fact Diploma’s shares reflect an optimistic outlook in terms of growth. But the company’s ability to offer a unique service to its customers is still intact.

This is what gives it the ability to weather an inflationary environment. And while this remains intact, I think the stock could still be one to consider buying.

Brand power

From the FTSE 250, AG Barr (LSE:BAG) has a small-but-mighty brand portfolio that might well give it scope to pass on the effect of higher prices. Irn Bru is a good example of this. 

With a few exceptions – mostly in the US – soft drinks firms aren’t known for their growth prospects. But the company has been acquisitive in recent years and revenue has been growing strongly as a result.

AG Barr total revenue 2015-2024

Created at TradingView

So far, though, the company hasn’t fully realised the potential synergies from its acquisition of BOOST a couple of years ago. Operating margins have thus been lower in the last couple of years. 

AG Barr operating margin 2015-2024

Created at TradingView

That’s where the next wave of growth comes from for AG Barr. And I’m optimistic that the resilience of Irn Bru in its core market will allow the company to offset the effects of inflation. 

A potential risk for the business is the rise of anti-obesity drugs. These have the potential to dampen people’s enjoyment of these kinds of drinks, which could potentially dampen demand.

I suspect, though, that the market is underestimating AG Barr’s ability to raise prices to offset a gradual decline in demand. With the stock falling back to £6, I think investors should consider buying.

Inflation again

Warren Buffett says that the best investment someone can make against inflation is in their own skills. And the second-best is owning stock in an outstanding business.

Whether inflation is 2% or 10%, companies that are able to grow their earnings to offset this will typically fare better than those that aren’t. And that makes growth stocks important heading into 2025.

The post 2 inflation-resistant growth stocks to consider buying in 2025 appeared first on The Motley Fool UK.

Bubbling over

One stock that has been growing of late is AG Barr (LSE: BAG), the Scottish drinks manufacturer. The shares are up 29% over the past year, a bigger rise than three-quarters of Footsie constituents and four-fifths of FTSE 250 constituents. Pair that with a reasonable 2.49% dividend and this is a stock that investors may wish to consider for their portfolios. 

While AG Barr isn’t exactly a household name, its products like Irn-Bru, Tizer along with those it sells under licence like Orangina and Rockstar surely are. Its flagship Irn-Bru outcompetes Coca-Cola in Scotland, a testament to the firm’s branding. But the firm has been performing well across the board with Rubicon a strong seller in recent updates. 

The company looks to be on the up and up. Sales and earnings are growing. Forecast earnings growth looks very handsome. While a price-to-earnings ratio of around 18 isn’t cheap, predicted EPS growth will bring that down to just 12 if forecasts up to 2027 are accurate. Analysts like the look of the stock too with all seven covering it marking it as a ‘Strong Buy’. Their average one-year price target is 750p, or a 20% rise. 

A little flat?

As for negatives, the company is narrowly focused. Around 87% of sales come from soft drinks and a further 10% from “cocktail solutions”, which are soft drinks to mix with alcohol. Further to this, around 96% of sales are in the UK. The future of this company relies heavily on Britons retaining their sweet tooth and thirst for spirits and mixers. It’s telling that slow sales this year were partly attributed to a lack of summer sunshine on our fair islands. 

Another danger is the impact of the sugar tax. Since the previous government slapped its levy on sugary soft drinks in 2018, manufacturers have been scrambling to deal with it. AG Barr changed the Irn-Bru recipe to have 50% less sugar. Then it brought back a version called Irn-Bru 1901 with the original recipe. Through it all, the share price is, despite recent strength, still a few percentage points below where it was when the levy was brought in. 

The risks don’t end there either. Supply cost inflation is rising, carbon dioxide shortages continue and the sector itself is subject to cut-throat competition and potentially changing customer tastes. While I cannot say this is a bad company at all, on balance, it’s one I’d prefer to not to buy.

The post 1 FTSE 250 stock analysts are calling a ‘Strong Buy’! appeared first on The Motley Fool UK.

Over the last decade, growth stocks have been the place to be. But this isn’t something I’m focusing on as I look for stocks to buy for the next 10 years.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Finding winning investments

Investing is about predicting the future and this is inevitably uncertain. The biggest difference between growth investors and value investors is how far ahead they think they can see. 

Growth investors tend to think they can see a long way into the future. They’re happy buying shares at high P/E multiples because they expect earnings growth for a long time.

By contrast, value investors tend to think the future’s uncertain. They’re usually (though not always) wary of the risk of disruption and tend to want this reflected in the share price.

This can sometimes mean value investors miss out on opportunities where companies keep doing well into the future. But it’s not always the case that growth stocks outperform.

Growth vs value

While growth stocks have outperformed their value counterparts as a group over the last 10 years, they haven’t all been successful. Teladoc Health‘s a great example.

Despite revenues increasing more than 3,000%, costs have also gone up and the stock’s now 62% lower than it was when it went public in 2015. That’s not a good result by any standard.

Equally, not all value stocks have underperformed. Over the same period, shares in Premier Foods – a UK company trading at a price-to-earnings (P/E) ratio of 15 – are up over 400%.

That’s better than the FTSE 100, FTSE 250, or S&P 500. And it shows that finding winning investments isn’t as straightforward as looking for growth over value. 

The most important thing

Whether it’s growth or value, I think the most important thing is finding a company that has a predictable outlook. AG Barr‘s (LSE:BAG) a good example.  

The company’s biggest product is Irn Bru, which has been almost impossible to disrupt in Scotland and equally difficult to export anywhere else. That makes it highly predictable. 

This kind of predictability has typically come at a cost – over the last 10 years, the stock has traded at a P/E ratio of around 20. But it’s below that level right now, ranging 18 and 19.

Furthermore, management’s expecting margins to expand as the costs of acquiring BOOST Drinks Holdings in 2022 wear off. So I think there could also be higher profits on the way.

Predicting the future

Investing involves trying to forecast the future and this means there’s always uncertainty. With AG Barr, inflation pushing up the price of raw materials is a risk to take seriously.

Compared to other more technical businesses though, I think it’s easy to assess what the long-term future might look like. And that’s why it’s on my list to consider buying right now.

The post Should I buy growth or value in my Stocks and Shares ISA? appeared first on The Motley Fool UK.