With that in mind, I’m looking into two top ESG plays for me, Coca-Cola HBC (LSE: CCH) and GlaxoSmithKline (LSE: GSK). 

Coca-Cola HBC

This Switzerland-based bottler of the Coca-Cola product and its ESG rating have me asking myself if I should invest. 

It has consistently ranked at the top of the FTSE4GOOD Index series since its inception in 2000. This is due to its advancements in working with recycled materials. By 2025 it plans to be using 50% recycled PET (the type of plastic it uses for packaging) in its European operations and 30% across the company as a whole.

Due to the pandemic, sales fell 12.7% to €6.1bn in 2020, but things are looking up. As vaccinations continue across the world, I’m growing more bullish on the stock and its recovery. In a recent statement, the company said: “We expect to see a strong FX-neutral revenue recovery in 2021”. This has led analysts to provide expectations of revenue growth of 8.3% and 6.7% for FY21 and FY22, respectively.

There is still the risk of renewed Covid-19 cases though, which would throw a spanner in the works of any recovery. Considering the rapidly growing infection rates across major European countries, it’s very possible that business could take another hit. 

The Coca-Cola HBC price is currently 2,488p, up 27% in the past year from a price of 1,952p, and giving it a price-to-earnings ratio of 25. Should the current speed of economic reopening continue, I will be more confident to invest in Coca-Cola HBC as the risk of re-closure reduces.

GlaxoSmithKline

As far as ethical investing goes, you probably weren’t thinking of one of the FTSE 100’s top pharma stocks. However, GlaxoSmithKline has proven to be an ESG leader thanks to its work in providing access to medicine. 

The pharma giant, whom activist firm Elliot Management recently took a large stake in, is ranked highest in the Access to Medicine Index. This index measures Big Pharma’s efforts to make its products available to more vulnerable populations. What’s more, this top British firm has promised to have a net-zero environmental impact by 2030. 

And although GlaxoSmithKline missed out on 2020’s pharma rally, I believe it could be on the up. New pharmaceutical sales rose 12% to £2.5bn in Q3, accounting for 30% of all revenue. It also remained very profitable, with an operating margin of 22%. It is the sixth-largest pharma company in the world with a strong brand and dedicated workforce.

Unfortunately, its planned corporate restructuring and dividend reduction could spell volatility for its share price. By reducing its dividend for the first time in 15 years and welcoming a heavy-hitter such as Elliot Management on board, it could be too much, too fast. 

GlaxoSmithKline is currently priced at 1,333p, down 20% in the past year from a price of 1,668p, and giving it a P/E ratio of 13. As it is still well off its all-time highs, I would be interested in it as a long-term dividend payer. 

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Jamie Adams holds no position in stocks mentioned above. The Motley Fool UK has recommended GlaxoSmithKline. 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.

Covid-19 restrictions will soon start to be lifted and my portfolio and I are beginning to feel quite thirsty. So, I’ve decided to look at what I think are the two best UK beverage stocks on the market right now. I’m not looking for the best small beverage stocks to invest in, but rather some bigger businesses that I believe are worth investing in now.

Naked Wines

I was only made aware of Naked Wines (LSE: WINE) last year when the coronavirus first struck. This forced me to resort to home drinking and to order online. The company killed both of these birds with one stone, making it a very interesting UK beverage stock for me.

The Naked Wines share price has fallen sharply from the record peaks above 800p struck in February. But now it’s rising once more and remains up 186% in the past year as of market close on 6 April, rising from 268p to 765p.

Ahead of its full-year results due on 15 April, any dip in the price could be a great buying opportunity for me. I hope this report will be a timely reminder of just how well the company has fared in the past year. Its most recent financials showed a near-80% rise in revenue (to £157.1m) for the six months to 28 September, giving it a P/E ratio of 41.5. This is thanks to strong demand from both new and repeat customers. 

The pandemic showcased just how simple and effective a service Naked Wines can provide. However, pub and restaurant reopenings around the world could damage its share price as consumers flock back to such venues so that’s a risk I have to bear in mind if I buy now. That’s especially so as the share is clearly expensive already and is priced to continue performing strongly. If it fails to meet lofty expectations, the price could fall.

Coca-Cola HBC     

When buying strong UK beverage stocks for my portfolio, I also think I need to look no further than Coca-Cola HBC (LSE: CCH). This strategic partner of the Coca-Cola Company bottles and distributes its products in 28 countries. Naturally, it took a hit in 2020 as restaurants and bars closed, and travel and events ground to a halt. Sales fell 12.7% to €6.1bn.

But a successful vaccination programme leading to reopenings across the UK is promising. I think it could be a good time for me to add this stock to my portfolio. I’m looking forward to actually drinking outside of my flat for the first time in months and other consumers are likely to be feeling that way too. “We expect to see a strong FX-neutral revenue recovery in 2021,” the company said recently. And analysts expect revenue growth of 8.3% and 6.7% for FY21 and FY22, respectively.

Coca-Cola HBC is currently priced at 2,360p, up 21% in the past year from a price of 1952p, and giving it a P/E ratio of 24. 

This ‘reopening’ stock isn’t without significant risks though, especially considering the rapidly growing infection rates in Europe and other countries. This could throw a spanner in the works of any plan to get the world back to normal. As with Naked Wines, it’s also expensive. But I hope that its current upward trajectory will continue, especially as this UK beverage stock is still around 20% off of its all-time highs.

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The Motley Fool UK owns shares of Naked Wines. 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.

One of them is Bunzl (LSE: BNZL), a one-of-a-kind business. It operates in the relatively dull industry of outsourcing, but the company has been able to excite shareholders with fantastic returns. Over the past decade, the stock has returned 13.8% per annum, and the group has increased its dividend payouts to investors for 26 consecutive years.

Growth through acquisitions 

Bunzl’s growth has come from both organic expansion and bolt-on acquisitions. The company claims to have made 157 acquisitions since 2004, spending on average £222m a year and adding average annualised revenue of £278m. 

As long as the company continues to make sensible acquisitions at attractive prices, I see no reason why this growth trend cannot continue.

Now looks to be a great time to buy into this growth story. The stock is down around 20% since April when management warned revenue growth was not living up to expectations due to challenging macroeconomic and market conditions.

Following the decline, shares in Bunzl have fallen to a forward P/E of 15.9, substantially below the five-year average of 20. There’s also a dividend yield of 2.6% on offer for income seekers.

And if the stock returns 13.8% per annum for the next 10 years, I calculate it could turn a £10,000 investment into nearly £40,000. At this rate of return, an investment of £50,000 could grow to be worth just over £1m in 22 years. 

Competitive advantage

Another FTSE 100 dividend growth stock I believe could help you make a million is Coca-Cola bottler Coca Cola HBC (LSE: CCH). 

This company’s primary competitive advantage is its exclusive licence to bottle Coca-Cola in many European countries, as well as other products. The unique manufacturing agreement has helped the firm grow earnings at a rate of nearly 15% per annum for the past six years. This expansion has helped support dividend growth of 10% per annum since 2013. 

It looks as if this trend is set to continue with City analysts predicting earnings growth of 18% over the next two years. According to a trading update published today, the firm is on track to hit these growth targets despite adverse weather conditions across Europe. 

As well as its core European market, Coca Cola HBC is also expanding into emerging markets. The group recently acquired Bambi, the leading confectionery brand in Serbia, which added 0.8% to revenue growth in the third quarter of 2019. 

Impressive returns

As Coca Cola HBC’s earnings and revenues have ballooned over the past few years, the stock price has also surged higher, rewarding investors who bought in at the company’s IPO back in 2013. 

Over the past five years, including dividends, the stock has produced a total annual return of 15%, in line with earnings per share. If earnings continue to expand at a double-digit rate, I think there’s a good chance this trend will continue. It would take 20 years to turn a £50,000 investment into £1m at an average annual total return of 15%.

The stock is currently trading at a forward P/E of 19.5, slightly below its five-year average of 22.5, and it also supports a dividend yield of 2.5%.

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Rupert Hargreaves owns no share 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.

A few years ago, it looked as if Astra was on the rocks. Patent expirations were weighing on earnings, and the company was struggling to find new treatments to fill its pipeline.

However, over the past three or four years, management has wholly reinvigorated the group. A relentless focus on finding new pharmaceutical products is starting to pay off, and the company is expected to return to growth in 2019 after several years of falling earnings. 

At the end of July, Astra reported its fourth successive quarter of rising revenues with sales increasing 19% to $5.7bn. Most of this growth is from new treatments. 

Management expects five of these treatments to reach blockbuster status in 2019, which means they will generate more than $1bn. CEO Pascal Soriot has described this as a “remarkable” performance for the company. 

Dividend growth

Astra is already a dividend champion, but this earnings growth suggests shareholders are in line for even bigger distributions going forward.

At present, the stock yields 3.2%, and the payout is covered 1.3 times by earnings per share. Cover is expected to hit 1.6 next year as earnings expand further, and I would expect Astra to make the most of this and increase its distribution to investors further. 

Another FTSE 100 dividend stock that I think could be a great addition to your portfolio today is Coca-Cola HBC AG (LSE: CCH).

Global partner

This is one of Coca-Cola’s major bottling partners, and the agreement with the drinks company gives the business a virtually guaranteed income stream. 

As a result, I think the dividend outlook for this firm is bright. While the stock might not offer the highest yield around (it currently yields 2.2%) the distribution is covered 2.3 times by earnings per share. It also has an impressive track record of dividend growth. 

Coca-Cola’s earnings per share have grown at a compound annual rate of 14% over the past six years as the business has branched out into new markets and improved operational efficiency. 

Earnings growth has allowed management to increase the dividend by an average of 10% every year, and I expect this trend to continue, given Coca-Cola’s market-leading position and track record of improving profit margins.

Market leader

The final FTSE 100 dividend stock that I would buy and hold forever is data giant Experian (LSE: EXPN).

Experian manages data that helps businesses and organisations to lend and prevent fraud.

In the world of data, bigger is always better. The more data you have, the better the service. And when it comes to data gathering, Experian has been a leader in the field since 2006, giving the firm a tremendous edge over its competitors.

As Experian has capitalised on its market position to grow, the dividend has grown at a compound annual rate of 5.1% over the past six years. The yield stands at 1.6% right now, but it’s covered 2.2 times by earnings per share, which gives plenty of room for growth going forward. 

The one downside is Experian’s premium valuation. The stock is trading at a forward price-to-earnings of 27 right now, but I think this is a price worth paying for such a world-leading business. 

The post I’d buy and hold these 3 FTSE 100 dividend growth shares for life appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended AstraZeneca and Experian. 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.

For long-term real growth in capital and income, I’d look to invest in FTSE 100 companies in a Stocks & Shares ISA. Here, I’ll explain why Associated British Foods (LSE: ABF) and Coca-Cola HBC (LSE: CCH) are two such businesses I’d happily buy today.

Prudent stewardship

ABF generated sales of £15.6bn last year. The group is geographically diversified, with 60% of sales outside the UK. It’s also diversified by business segment, with operations in grocery, ingredients, sugar and agriculture, but also clothing retail — namely, Primark. The value fashion chain has become the jewel in the crown, responsible for almost half of group sales last year.

As well as its attractive diversification, shareholders also enjoy the benefit of prudent stewardship that comes with a company still majority owned by its founding family. These benefits include a strong balance sheet (net cash of £386m last reported), and a well-covered dividend that’s increased each year for as long as I can remember.

For ABF’s current trading year (ending 30 September), management expects earnings per share (EPS) to be in line with the prior year’s 134.9p, but City analysts expect this to rise 12% to 151.4p next year. At a share price of 2,265p, this gives a price-to-earnings (P/E) ratio of 15. I think it represents very good value for such a high-quality and reliable business.

I reckon investors today can expect dividends of around 48p a share over the next 12 months. At the current share price, this would represent a yield of 2.1%, compared with the aforementioned best-buy 1.46% interest rate from an easy-access Cash ISA.

Defensive and attractive

With sales of €6.7bn (£6bn at current exchange rates), Coca-Cola HBC is one of the largest bottling and distribution partners of The Coca-Cola Company. Operating in 28 countries, its established markets (37% of last year’s revenues) are Austria, Cyprus, Greece, Italy, Northern Ireland, Republic of Ireland and Switzerland. It’s also developing, and emerging markets extend from central Europe to the east coast of Russia, and it also operates in Nigeria.

Backed by a global titan and an array of popular brands, including four of the world’s five best-selling, non-alcoholic, ready-to drink beverages (Coca‑Cola, Coca‑Cola Light, Sprite and Fanta), I see Coca-Cola HBC as a strong, defensive business operating in an attractive mix of established and emerging markets.

City analysts are forecasting 8% EPS growth to €1.41 (127p) for its current trading year (ending 31 December), followed by 11% growth to €1.57 (141p) next year. The latter gives a P/E of 19 at a share price of 2,670p. This is a premium rating but fully merited, in my opinion, due to the aforementioned defensive and other attractive qualities of the business.

Buyers of the stock today can look forward to an annual ordinary dividend of 63 eurocents (57p) a share in the next 12 months, according to City analysts. This would give the same initial yield of 2.1% as ABF. However, analysts fancy Coca-Cola HBC will also pay a special dividend that would more than double the yield this year.

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G A Chester has no position in any of the shares mentioned. The Motley Fool UK has recommended Associated British Foods. 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.

However, since I last covered the business, the stock has risen by around 15%, excluding dividends and, after these gains, I think it could be time to take profits.

Too expensive 

In my opinion, Rentokil now appears costly relative to its projected growth. Its shares are currently dealing at a forward P/E of 25.6. Even though earnings per share are expected to increase by 83% this year, that still gives a premium PEG ratio of 2.6 — a ratio below one implies the shares offer growth at a reasonable price. 

At this valuation, if the company misses City expectations, the shares could lurch lower, which would be a disappointing result for investors. However, it would also allow investors who have been sitting on the sidelines to buy in at an attractive valuation. 

And that’s what I think holders should do today. While I believe shares in Rentokil are overvalued, I’m still optimistic about the outlook for the group as there will always be a demand for pest control services around the world, and Rentokil is one of the best in the business. However, I don’t think it’s worth paying such a premium for the shares. It will be better, in my opinion, to sell up and buy back in at a more attractive valuation. 

A better buy

If you want to sell Rentokil and buy into another FTSE 100 growth stock, I recommend Coca Cola HBC (LSE: CCH). This company immediately stands out to me as a better buy because the shares are cheaper.

The stock is trading at a forward P/E of 20.3, which may look expensive compared to the rest of the market, but it’s in line with the rest of the UK beverage industry average (shares in Rentokil are valued at double the sector average, by comparison). Also, this Coca-Cola bottler supports a more attractive dividend yield of 2.2%, compared to Rentokil’s 1.3%. 

Further, according to my research, Coca Cola HBC is more predictable as a business than its smaller FTSE 100 peer. The company’s operating profit margin has increased from 5.4% to 9.6% over the past six years, rising steadily every year. Meanwhile, Rentokil reported an operating profit margin of 10.7% in 2016 and then 30.7% in 2017 before it fell back to -3.9% in 2018.

Balance sheet strength  

Coca Cola HBC also has a much stronger balance sheet because the business doesn’t rely on acquisitions as much as Rentokil. Based on last year’s figures, the company’s net debt, as a percentage of shareholder equity, was less than 20%, compared to Rentokil’s 136%.

So this suggests Coca Cola HBC is more predictable as a business, has a stronger balance sheet and the shares are cheaper. In my opinion, all of these factors mean the company is a better investment than Rentokil, especially considering the latter’s premium to the rest of its sector and the broader market.

The post One FTSE 100 growth stock I’d buy today, and one I’d sell appeared first on The Twelfth Magpie.

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But when I look past the company’s alluring dividend yield, I’m worried about the disturbing trends developing on its balance sheet.

Debt binge

National Grid owns the majority of the electricity distribution infrastructure in the UK, so it’s one of the market’s most defensive businesses. Its electricity transmission and distribution network is worth, according to the company’s balance sheet, £47bn, although I think this understates the actual value because building the system from the ground up today would be virtually impossible.

With such a large asset base, lenders have been happy to let National Grid borrow against its transmission network. The company has around £26bn of net debt. What worries me is how the balance sheet has deteriorated in recent years. 

At the end of 2013, National Grid had £5bn of cash and net debt of £23bn. Now, the company only has £2bn of cash to £26bn of net debt. The debt-to-assets ratio has remained relatively constant at around 57% over this time frame.

These figures tell me that the group is spending more than it can afford, and current trends suggest it’s only going to get worse. 

Analysts expect the company to report a net profit of £2bn for 2019, virtually the same as the figure reported for 2013. But since 2013, the dividend has expanded by 2p per share and dividend cover has fallen from 1.5 to 1.2.

These trends cannot continue indefinitely and, sooner or later, I think National Grid will have to bite the bullet and reduce its dividend to a more sustainable level. I don’t know when this will happen, but with profits stagnating, the company can’t keep increasing its dividend forever. 

Dividend growth buy

One company that can keep increasing its dividend, however, is Coca-Cola bottler Coca-Cola HBC (LSE: CCH). Analysts are expecting this enterprise to report a net profit of €494m for 2018, growth of more than 160% over the past six years. 

As income has exploded, management has pursued a conservative dividend policy. The company now pays out less as a percentage of earnings than it did six years ago, even though the dividend has doubled. Specifically, in 2012, Coca-Cola HBC distributed €0.34 per share to investors, 65% of reported earnings per share. For 2018 as a whole, analysts have the business paying out €0.59 which, according to my figures, will work out at just 44% of earnings.

So when it comes to dividend growth, it certainly outperforms National Grid, in my opinion. The one downside is that shares in this business only yield 2.3%, although with the dividend growing at a rate of around 10% per annum, it won’t take long for the distribution to catch up. 

Finally, when it comes to debt, Coca-Cola HBC has a net debt-to-assets ratio of just 24% which, in my opinion, is yet another reason to buy the company over National Grid.

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Rupert Hargreaves owns no share 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.

The business, which produces soft drinks under the Vimto brand, as well as the Feel Good, Starslush, Levi Roots and Sunkist brands, has a record of turning out steady growth for investors year after year. Indeed, over the past six years, earnings per share have grown at a steady compound annual rate of just under 10%.

Slow and steady

It looks as if Nichols is on track to repeat this performance for 2018. In a trading update published today, the company announced that group sales for 2018 totalled £142m, up 6.9% year-on-year and significantly above the City’s projection for revenues of £139m. Despite the fact that some analysts have warned that the firm might see a downturn in sales due to the introduction of the sugar tax in the UK, this side of the business has managed to defy expectations. The UK, which is its largest market, reported sales growth of 12.6% to £114.6m.

These numbers are highly impressive, especially at a time when so many other UK consumer-focused businesses are struggling. Nichols seems to be outperforming the pack.

In some respects, this performance isn’t surprising. Nichols is still managed by the founder’s grandson who owns more than £30m of shares. He has so much skin in the game, the chairman is highly incentivised to provide a positive result for all investors.

I’m highly attracted to Nichols for all the reasons above, but the one thing that’s stopped me from jumping in is the current valuation. The shares are changing hands today at a forward P/E of 19.9. I’m happy to pay for quality, but this is a little too expensive for me. However, if the price drops significantly over the next 12 months, I won’t be able to resist adding Nichols to my portfolio.

High-quality income

Nichols is a bit too pricey for my tastes, but another high-quality stock I’m eyeing up is Coca-Cola HBC (LSE: CCH). From a valuation perspective, these two businesses are similar. Indeed, Coca-Cola HBC is trading at a forward P/E of 20.2. Nevertheless, I think the company is worth this multiple because of its size and association with the Coca-Cola brand. On top of this, with its international diversification (the business operates across Europe), I think it provides the perfect hedge against Brexit uncertainty.

That’s why I’m picking the company as one of my top FTSE 100 dividend stocks for 2019. The dividend yield of 2.3% might not seem immediately attractive, but the distribution has nearly doubled over the past five years and analysts believe it will continue to expand for the foreseeable future. The balance sheet is relatively clean, with a net gearing ratio of only 20.2%. Last year, the enterprise produced to free cash flow of €390m, easily covering the total dividend payout of €160m, leaving plenty of room for further distribution growth.

Put quite simply, this stock has all the qualities I look for in a dividend play. If it’s income you’re after, I believe you won’t waste your time taking a closer look at Coca-Cola HBC. 

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Nichols. 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.

In my opinion, this makes the company one of the best investments around to protect your portfolio against Brexit. No matter what the outcome, demand for soft drinks throughout Europe is unlikely to change as a result of Brexit.

What’s more, virtually all of the company’s products are sold in European markets, so if the UK economy struggles after a no-deal, Coca-Cola HBC should continue to profit. Indeed, thanks to its geographical diversification, and defensive product line up, management expects the overall impact from Brexit on the group to be “minimal.” 

I’m also attracted to the company’s dividend credentials. For the past five years, Coca-Cola HBC has increased its dividend at a rate of 10% per annum. Based on current figures, the payout is covered 2.3 times by earnings per share (EPS), which gives plenty of room for further payout growth. 

With EPS set to grow 19% over the next two years, in this period I reckon the dividend will grow faster than it has in the past. There’s also significant scope for earnings growth from current levels as management believes the European market is “fertile for price increases.” This tells me the outlook for Coca-Cola HBS’s dividend is extremely positive. 

Falling sales 

Talking of flowing liquids, Rotork (LSE: ROR), the market-leading producer of flow control products, is sliding today after the firm reported a 4% decline in order intake, or by 2% on an organic constant currency basis. 

These figures seem to imply that the company’s growth is going to slow in the near term, a reality that is at odds with the stock’s current valuation of 22.9 times forward earnings. I’m always wary of buying high-priced stocks for this reason. If growth doesn’t live up to expectations, then the resulting sell-off can be sudden and aggressive. I don’t want to be on the wrong end of a profit warning. 

With this being the case, I’m not a buyer of Rotork today. As of yet, we don’t know if this decline in order intake is a one-off, or a sign of things to come. If it is a sign of things to come, I reckon the downside from current levels could be significant, considering the current premium valuation investors are placing on the shares. 

The one redeeming feature of this business is its strong balance sheet. According to today’s trading update, Rotork had a net cash balance of £12.2m at the end of October. Unfortunately, this isn’t enough to convince me that the business is worth buying, and neither is the token dividend yield of 2%. I would much rather add Brexit-proof Coca-Cola HBC to my portfolio.

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Slow and steady growth

DCC has built itself up over the years by reinvesting profits from operations back into the business. Organic growth, as well as bolt-on acquisitions, have helped net profit grow at a rate of around 19.6% per annum over the past six years.

For Fiscal 2018, City analysts are expecting the company to report earnings per share growth of 25%. According to a trading update issued today, the group is on track to hit this forecast, and it continues to complement growth with acquisitions. 

A total of £670m has been spent on acquisitions so far this financial year and today the company announced the purchase of Elite One Source Nutritional Services in the US to help expand its DCC Health & Beauty Solutions arm. 

Growth should continue

Over the past few years, management has shown that it can acquire and integrate businesses efficiently. As long as the firm maintains its acquisition discipline, I see no reason why the business cannot continue to grow steadily through bolt-on buys for the next decade or so, although some investors might be put off by the group’s high valuation of 19.1 times forward earnings

Still, according to my figures, it won’t be long before DCC grows into this valuation. Indeed, if earnings per share continue to grow 20% per annum, in five years, the company is on track to earn 854p per share, giving a 2023 P/E of 8.2. This is why DCC is one of my favourite FTSE 100 growth stocks.

Emerging market growth

Another of my favourite blue-chips is Coca-Cola HBC (LSE: CCH). As the primary bottler of Coca-Cola products in Europe, this company is relatively defensive by nature making it attractive for long-term investors. 

That said, over the past five years, its growth has hardly been anything to get excited about. Reported earnings per share have increased at a rate of only around 5% per annum. Nonetheless, over the next two years, City analysts are expecting big things from the firm with earnings per share growth of 10% pencilled in for 2017 and 11% for 2018. This increase is a result of management efforts to aggressively cut costs and help improve profit margins. At the same time, it is also trying to expand into emerging markets such as Hungary, the Czech Republic, Russia, and Nigeria. During the third quarter of 2017 volumes in these markets increased between 3.5% and 5.1%. 

One factor that has been holding it back during the past few years is debt and management has had to focus on debt reduction rather than shareholder returns. Efforts on this front are starting to yield results with net debt down by 50% over the past five years, and net gearing is now just 35%. 

As debt falls further, I believe management will switch from debt reduction to cash returns to shareholders and these cash returns, coupled with steady growth should translate into healthy stock price gains.

The post DCC plc isn’t the only Footsie growth stock I’d buy today appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no share 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.