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The UK stock market has been lethargic lately, but that is generating good value in the FTSE 100.
There are several stocks I would love to buy but I don't have additional funds. It's one of the frustrations of being completely invested.
However, they are on my watch list and it seems to me that they are rattling in their cages and screaming to be bought. If additional funds are available in October, I will do further research and seriously consider them.
A defensive gem
For example, I like the look of Coca-Cola HBC (LSE: CCH), the Swiss-based bottler of Coca-Cola products.
In August, the company delivered decent half-year results and an optimistic outlook statement, despite some challenging market conditions. I believe the strength of the Coca-Cola brand serves the business well and gives it strong defensive credentials.
In other words, the company may be less affected by the ups and downs of the overall economy than many others.
However, the directors are not happy with the company simply staying afloat. They have a clear long-term growth agenda with a vision for the company to be “the leading 24/7 beverage partner”.
The operation is large, serving around 740 million consumers in 29 countries, and directors believe the product portfolio “It is one of the strongest, broadest and most flexible in the beverage industry.”
We are talking about brands like Coca-colaof course, but also Costa Coffee, fantasy, Elf, Schweppes, Kinley, gray goose, vergnano coffee, Waltz, FuzeTea, Powerade, capri, monstrous energy, finnish vodka, The Macallan and Jack Daniel's.
There are some powerful names on that list, and that's one of the main reasons I'm interested in the company as a potential long-term investment.
Operate well with growth ambitions
Meanwhile, at around 2,688p, the share price is down a bit from its summer highs.
However, City analysts have positive expectations for the business. They anticipate normalized earnings to grow around 5% this year and just over 10% in 2025.
However, as with all businesses, there are risks. One thing we've seen lately with other similar companies is that their brands sometimes haven't been as defensive as they're supposed to be. Recent commercial weakness of the beverage company Diageo is an example.
Another risk is that the company one day loses its Coca-cola license to a competitor. If that happens, it would be a disaster for the business.
However, the forward-looking P/E ratio is around 13 for 2025 and the expected dividend yield is just over 3.4%. Those figures are similar to the average for the entire FTSE 100, so I consider the stock to offer fair value now.
But fair value can be a good value for a quality trader. I'm aware of super investor Warren Buffett's approach when he favors buying great companies at fair prices over regular companies at cheap prices.
Coca-Cola HBC will release its third quarter earnings report on October 29 and I will be watching with great interest.
