A fallen angel?

I’m talking about C&C Group (LSE:CCR). The company owns some of the best-known drinks brands in the UK and Ireland, including Magners and Bulmers. It’s also one of the largest drinks distributors across the UK and Ireland, making up the majority of group revenue.

However, over the past year the share price is down 44%. Investors have been worried about a combination of weak consumer spending, a struggling hospitality sector and lower group revenues. In the latest full-year results, revenue fell 5.7%, and EBITDA declined nearly 8%, reinforcing concerns that growth had stalled. One factor in this was the loss of a Budweiser distribution contract in Ireland. But with the stock now at the lowest level since 2009, the experts think it could be a buying opportunity.

Looking at the future

Of the six analysts currently covering the stock that I can access, the average forecast for the coming year is 158p. Based on the current share price of 97p, this represents a 63% potential rally over the period. In terms of notable contributors, both the teams at Barclays and Deutsche Bank are targeting 150p.

When I step back and look at the company’s fundamentals, I think the business may be healthier than the market appreciates. Core brands including Bulmers and Tennent’s continued to grow revenue and gain market share. The company has also spent the past two years fixing operational issues that damaged investor confidence, including accounting problems and a failed systems integration programme. What I’m trying to say is that a lot of bad news is already factored into the current stock price.

CEO Roger White commented in the latest update that “we anticipate a series of exciting brand initiatives and a strong promotional programme across the key summer months.” These actions could help to provide a catalyst to encourage investors to look to buy the potential dip in the stock for long-term gains.

A subjective view

It’s true that analyst forecasts shouldn’t be taken as fact. After all, they’re looking at the same public information that we are. There’s no guarantee C&C will rally in the coming year. I believe the stock could do well, based on my own research and opinion, so I am seriously thinking about adding it to my portfolio. But there are risks involved, so it’s up to each investor to gather the facts and decide for themselves whether it’s a company they’d want to consider buying.

Should you invest £5,000 in C&c Group Plc right now?

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And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if C&c Group Plc made the list?

Jon Smith has no positions in the shares mentioned.

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I’ll start with a word of warning. These unloved companies are sometimes cheap for a good reason. But I’ve often found good buying opportunities by looking for underperforming companies facing manageable short-term problems. Here are three shares I’d buy today.

Long-term growth opportunity

My first pick is Spirent Communications (LSE: SPT). This tech firm specialises in producing equipment used by network operators for testing and service assurance. Customers include mobile network operators and big data centres operators such as Amazon Web Services.

Spirent’s share price hit the buffers in January, when the company warned that some customers had delayed purchase decisions. Although there had been no cancellations, some profit was expected to be pushed back into the second half of 2023.

When profits are unexpectedly weighted to the second half of the year, it’s sometimes a warning of problems to come. Initial delays could become cancellations, hitting profits.

However, on a medium-term view, I think that ever-larger and more complex networks are likely to support Spirent’s continued growth.

The stock’s forecast price-to-earnings ratio of 15 doesn’t seem expensive to me, given the company’s high profit margins and debt-free balance sheet. I see Spirent as a long-term buy.

A buy-and-forget stock?

Consumer goods firm PZ Cussons (LSE: PZC) owns brands such as Carex, Imperial Leather, and St Tropez. This 139-year-old group remains under family control and is also a member of my own share portfolio.

PZ Cussons’ share price slumped recently after the company warned of continuing cost pressures and a higher expected tax charge this year. However, the group’s pre-tax profit guidance for the year is unchanged. On balance, I don’t see too much to be concerned about here.

The main risk I can see is that CEO Jonathan Myers’ efforts to kickstart growth in this business will be unsuccessful. Although performance has improved since Myers took charge, profits are still lower than they were 10 years ago.

Personally, I’m encouraged by the changes Myers has made so far. There are no guarantees, but I see this as a fairly low-risk investment at current levels.

A strong recovery

Irish firm C&C Group (LSE: CCR) owns the Bulmers, Magners, and Tennent’s cider and beer brands, as well as a number of other smaller labels. C&C is also a distributor in the UK, supplying the trade with a wide range of drinks.

The company had a tough pandemic, as pub closures hit the trade hard. But this business seems to be recovering quite well. Revenue was up by 20% during the key month of December compared to the previous year. Operating profit for the year to 28 February is now expected to be close to 2019 levels.

C&C’s debt has now fallen back to more comfortable levels and City analysts expect the firm to restart dividend payments this year. Although there’s a risk that pub sales could weaken during a recession, I think the shares look reasonably valued on 11 times forecast earnings.

As with PZ Cussons, I see C&C as buy-and-hold stock that could deliver attractive returns from current levels.

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