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I’ve been wondering if Coca Cola stocks are the best beverage stocks in the London Stock Exchange.
No, I haven’t lost my mind. It is possible to buy Coca-Cola shares that are listed directly on the LSE. Kind of. Coca-Cola HBC AG and Coca-Cola Partners in Europe Pacific they are listed in the UK. They are licensed to bottle and distribute Coca-Cola products on behalf of the US-listed Coca-Cola Company, from Europe and Africa to Asia and the Pacific.
The choice dilemma
Coca-Cola’s bottling companies are not the only beverage stocks listed on the LSE. the likes of British, On top, nicholsand fever tree they are also there for your consideration. So which of these four beverage makers and two bottlers do I like best?
I’m biased for quality over value, momentum, growth, or any other factor. I measure quality by looking at instantaneous ratios of profitability, efficiency, leverage, and liquidity.
Britvic posted the best return on equity in the past 12 months. Fevertree and AG Barr have the best operating margins. Britvic and Nichols are best at turning inventory into cash and getting the most out of your assets, respectively. Fevertree and Nichols seem the least leveraged and best equipped to handle their short-term debt. Coke bottlers don’t stand out as good or bad on those measures. But they do trade at price-earnings (P/E) ratios—13.8 for Coca-Cola HBC and 14.6 for Coca-Cola Europacific Partners—that are below the beverage industry average.
Unfortunately, Fevertree doesn’t look cheap at all. It is trading at a P/E of 52. Nichols is better positioned with its P/E of 20. But it is still above average for beverage stocks. AG Barr has an average of 17, while Britvic has a P/E ratio of 14. So AG Barr and Britvic look promising, along with Coca-Cola bottlers who are strong performers.
UK beverage stocks
The Coca-Cola Company has strict control over where and how much Coca-Cola bottlers produce, and how profitable they are. Since they are not in full control of their destiny, I don’t think I can consider them my pick of the beverage stock group. So, I’ll stick with Britvic and AG Barr.
Britvic has its own brands. But it also bottles and sells drinks in the UK on behalf of others such as Pepsi. AG Barr bottles some, but not as much as Britvic. The large volume of Pepsi sold in the UK probably explains why Britvic’s average operating margin of 10.4% is lower than AG Barr’s 15.5%. Britvic seems to be more like Coca-Cola bottlers than I’d like.
While Britvic has an advantage in size and foreign markets over AG Barr (which should reduce its risk), I prefer the latter. I like AG Barr’s focus on smaller markets where it might have an advantage. has Irn Bru, the best-selling soft drink in Scotland. And recently bought an oat milk business (MOMA) with a strong position in a growing market.
All things considered, if I had to pick my main bet on drinks stocks on the LSE, that’s the one I’d pick.
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