Hello! Graham here with my annual round-up of investment ideas.
This is going to be split into two parts.
First, I’m going to do a review of the ten ideas mentioned in last year’s article (published on January 16th 2023, but using ideas from SCVRs in the latter half of 2022).
After that, I’ll do an article with my ten ideas for 2024.
I’m hoping that there will be plenty of overlap between the two articles!
But let’s start with a review of my ideas for 2023.
A G Barr (LON:BAG)
Total return for 2023 : -1.3%.
Market cap: £579m.
This Scottish soft drinks maker saw its share price drift lower at the start of the year, but it recovered in the second half with an upgrade to profit forecasts (in August) and then a robust “in line” trading outlook in September.
In October, it announced the £12m purchase of the soft drinks brand Rio. Barr already owned the exclusive licence to sell this brand.
So where do we go from here?
I’ve been positive on this share throughout 2023, pointing to its cash balance (last seen at £47m, July 2023, before the Rio acquisition), consistent performance during the Covid era, and strong revenue growth from price increases and acquisitions.
Barr does face an ongoing challenge to rebuild margins - its recent Boost acquisition instantly lowered company margins which were already under pressure.
The deposit retention scheme is also a concern - it will be implemented around the UK in c. 2025.
However, I remain stubbornly positive on this one.
When I wrote last year’s article, Barr was trading on a P/S multiple of 2x, which I said was “not high in the context of the last ten years”.
The price to sales multiple is now only about 1.6x, and the other value metrics remain interesting:
Therefore while acknowledging that the company faces sector challenges, my positive stance here remains unchanged!
Nichols (LON:NICL)
Total return for 2023 : 8.9%.
Market cap: £431m.
Based in North-West England rather than Scotland, this is another…
