Fears of a recession are mounting as inflation soars. Because of this, I am on the lookout for the best stocks to buy that would cope well despite any economic downturn. I believe Britvic (LSE:BVIC) is a good option. Here’s why.
Soft drinks producer
As a quick reminder, Britvic is a soft drinks producer with operations in the UK, Ireland, and France. It has a global reach with its many well-known brands, such as J20 and Robinsons. In addition to this, it also has an exclusive agreement to distribute PepsiCo products as well.
So what is the current state of play with Britvic shares? Well, as I write, they are trading for 831p. At this time last year, the shares were trading for 942p, which is a 11% drop over a 12-month period.
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Britvic shares have fallen in recent months due to macroeconomic headwinds as well as geopolitical tensions that caused a stock market correction.
The best stocks to buy have risks too
Two primary risks could derail Britvic’s progress and returns. Firstly, soaring inflation has led to a spike in the cost of raw materials. This could mean production costs go up and profit margins are squeezed. This could, in turn, hinder returns to shareholders.
Next, another macroeconomic issue in recent times has been the global supply chain crisis that has affected many industries and businesses. If Britvic is unable to procure items that are needed to produce its goods or even deliver its own items to customers, this could affect performance and returns.
Why I’d add Britvic shares to my holdings
If a recession were to occur, I’d expect Britvic shares and performance to dip temporarily but my investing mantra has always been to buy and hold for the long term. My belief is that the best stocks to buy have the ability to bounce back.
The first reason I like Britvic shares is its performance track record. I do understand that past performance is not a guarantee of the future, however. Its most recent update was a half-year report covering the six months ended 31 March 2022, released last week. It said that revenue and profit increased compared to the same period last year. Due to this, it declared a dividend of 7.8p, up 20% compared to the period last year.
This brings me nicely to my next point. Britvic shares would boost my passive income stream. Many of my best stocks to buy do this through dividend payments. I am aware that dividends can be cancelled at any time. This may occur in the face of a recession but I would expect them to be reinstated in the longer term. Britvic’s current dividend yield stands at just over 3%. This is higher than the FTSE 250 average of 2%.
Finally, Britvic has a worldwide presence and profile with good brand power too. Its exclusive agreement with soft drinks giant PepsiCo will also boost performance and returns in the long term, in my opinion.
Overall, there are some short-term risks but because I buy and hold for the long term, I think Britvic shares would make a good addition to my holdings. If a recession were to occur, the shares could even fall further and become a bargain buy.
