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FTSE 100 the stocks are well represented in my portfolio. And in recent months, I have been rallying more as stock prices in certain sectors have experienced further downward pressure.
But today I’m looking at parts of the index that investors might not regularly consider. It is certainly the case that I have not been paying enough attention to them.
So are they right for my portfolio? Let’s take a closer look.
ocado
I am looking ocado (LSE:OCDO) shares today because the stock is trading near its five-year low. Honestly, I haven’t given it much thought in recent years. The company has been struggling to turn its business model into a profitable one, and as a result, shares have plunged from their pandemic-induced peak.
For the full year, Ocado said he expects EBITDA close to breakeven, in line with guidance. That’s not exciting, but there are some promising aspects here. On the one hand, the company would be breaking even in a very difficult environment, characterized by double-digit inflation and a cost-of-living crisis.
Ocado has been successful in attracting new clients. The problem is that the sizes of the baskets have been getting smaller. It’s worth remembering that shipping costs are roughly the same regardless of whether customers order a basket of strawberries or a large weekly purchase.
But I’m encouraged by the progress the company is making, especially as Ocado’s premium price points aren’t currently exactly in line with the pressures on UK household budgets.
I’m not buying right now, but I’m keeping a close eye on this one.
Bunzl
Bunzl (LSE:BNZL) is a British multinational distribution and subcontracting company headquartered in London. The company has shown impressive growth in recent years, with its share price rising 7% in one year and 50% in three years, in part due to its highly successful acquisition-based growth strategy.
The company provides business essentials, from hard hats and cleaning supplies to disposable cutlery and coffee cups, and sells innovative solutions to a broad customer base. Bunzl’s management claims that its success can be attributed to its reliability. It is now worth over £10bn.
Today, the support services business is trading at a price-earnings ratio of 18.4. That’s above the index average, but below Bunzl’s long-term average, somewhere above 20.
Business looks strong despite the macro environment, but I have some concerns about its ability to continue growing through 2023. The UK economy is likely to contract according to the IMF, and that may not be positive for demand.
While not scientific at all, I would also like to point out that Bunzl’s share price has fluctuated considerably over the past two years, while the general trend is upward. It could pay me to catch him in a watering hole.
Bunzl is definitely an interesting proposition and I’ll keep an eye out for it, but I won’t buy it just yet.
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