He FTSE 100 It looks like it will get a new stock next year and it's no minnow. In fact, if it were to join the UK's blue-chip index today, the company would jump straight into the top 30 due to its considerable size.
The action in question is Coca-Cola Europacific Partners (LSE: CCEP), which currently has a market capitalization of £27.7bn. That's more than people like tesco and Vodafone!
Coca-Cola Europacific Partners shares have been on the market London Stock Exchange since 2019. However, I would say that the company is still largely unknown to most UK investors.
So why is it suddenly set to sneak into the FTSE 100 out of nowhere? And is this a stock you would consider buying?
Listing Reorganization
In July, the Financial Conduct Authority (FCA) implemented the biggest overhaul of UK listing rules in decades in a bid to boost London's stagnant stock market.
One big change was the merging of the standard and premium listing segments into a single category. This makes it much easier for companies to be eligible for inclusion in FTSE indices, which is what happened here with Coca-Cola Europacific Partners.
He is expected to join the Footsie in March 2025.
The share price has performed well, rising 22% so far this year and almost 60% in five years.
What exactly does the company do?
This is the largest in the world. Coca-cola bottler based on revenue. Produces, moves and markets beverages such as Coca-cola, fantasy, Elfand Monster in 31 countries, including the United Kingdom, Spain, Australia and Indonesia.
It is a major supplier of beverages to major fast food chains, including McDonald's and Hmm! Brands (owner of KFC and Pizza Hut).
In total, it serves almost 600 million consumers.
Strong growth and dividend
The first thing I look for in a potential investment is how fast the company has been growing. In this case, quite quickly (except pandemic).
| 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|
| Revenue | 12,000 million euros | 10.6 billion euros | 13.7 billion euros | 17.3 billion euros | 18.3 billion euros |
| Operating profit | 1,550 million euros | 813 million euros | 1,520 million euros | 2,080 million euros | 2,340 million euros |
Operating margin is a solid 12.8% and there is a well-covered dividend. The yield is only 2.9%, but the payout has been growing at a compound annual growth rate of 10.4% since 2019.
Some considerations
In the first nine months of 2024, revenue increased by 10.2% to €15.2 billion. However, the company lowered its full-year revenue forecast after a mixed third quarter, from 4% to 3.5% growth, although it maintained its guidance for 7% growth in operating profit.
He said cash-strapped consumers have started eating at home instead of dining out. This situation could get worse. Additionally, there was weaker volume performance in Indonesia, a Muslim-majority country, due to consumer boycotts of Western brands over the Middle East conflict.
Another thing is that the shares are not especially cheap. It is trading on a price-to-earnings (P/E) ratio of 18.5 based on this year's expected earnings. That's a premium to the broader FTSE 100.
my movement
Overall, there's a lot to like here. The company is solidly profitable, with a portfolio of premium brands that give it strong pricing power. Analysts are optimistic: 13 out of 19 rate the stock as a Strong Buy.
The company's markets range from Norway to the Philippines, presenting a good mix of developed and emerging economies.
However, I have a problem. I have just invested in another FTSE 100 bottler, namely Coca-Cola HBCand I don't want two of them in my wallet.
However, if this were not the case, I would consider buying some shares.
