The FTSE 100 has been a disappointment in recent weeks, but that needn’t be a deterrent for savvy investors. I think there are plenty of shares that are ripe for the picking because their share prices have taken a beating. A case in point is the little-talked-about bottler, Coca-Cola (NYSE:KO) HBC (LSE: CCH). Despite its share price wobble in the recent past, on average it’s been on an upswing, with the three-month moving average up 20% since the start of 2019.
But that’s not the only reason I was curious about this particular share. It’s now been almost a year since it decided to buy Costa Coffee from hospitality company Whitbread (LSE: LON:WTB), and it’s worth figuring out which of these two FTSE 100 shares has done better since and which is therefore a better investing option. Let’s look at them one at a time.
Coffee operation to bolster business As far as Coca-cola HBC goes, the financial picture looks respectable. In the first half of 2019, it showed a 3.4% currency-neutral revenue increase and a small net profit rise too. The company expects to continue expanding in the future as well, especially in emerging markets, where it’s already seeing the fastest volume increase.
It’s also moving forward speedily on the coffee business, having launched ready-to-drink canned Costa Coffee products in June this year. It now plans to launch the coffee chain in at least 10 of its existing 28 markets next year. With coffee being a growing and profitable business, I believe the company’s optimism about its prospects are well placed.
Whitbread warns of uncertainty Whitbread, however, hasn’t had such a good run, with its share price quite inconsistent through 2019 so far. While there have been some periods of increase, the broad pattern is pointing downwards. This is partly because of the recent choppiness in broader markets, but also because of its weak trading update for the latest quarter, which showed a 3.7% decline in like-for-like sales.
While the company is happy with the growth in its foreign business, it has flagged economic uncertainty in the UK as a cause of sluggish performance. Its cyclical Premier Inn hotels business saw a 1.5% decline during the quarter. I’m uncomfortable with the company saying that macro concerns could impact future performance as well. This doesn’t mean that the business will suffer endlessly, just that at present its prospects are unpredictable, making it a dicey investor choice.
The share price has also been somewhat volatile over the past five years and this doesn’t give me confidence going forward. On the other hand, Coca-Cola HBC has been far more predictable, even though it’s also had its share of ups and downs. As far as growth stocks go though, I would buy the latter’s shares for its past growth and more promising outlook.
Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2019