Soft drinks giant AG Barr (LSE:BAG) has enjoyed some impressive share price gains since the start of 2024. At 575.5p per share, the FTSE 250 company has gained 12% in value since New Year’s Day.
Barr — which manufactures popular brands like Irn-Bru, Rubicon, and FUNKIN — continued marching higher on Thursday after upgrading its forecasts for the last financial year (to January 2024).
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Right now, I think it may be one of the FTSE 250’s brightest growth stocks today.
Sales soar
Demand for Barr’s products remains rock-solid regardless of broader consumer spending, as today’s trading update perfectly illustrates.
In the last financial year, total sales are tipped to have risen 26% — or 7.6% on a like-for-like basis — to around £400m. As a consequence, adjusted pre-tax profits are expected to be £49.5m, up 13.8% year on year and above prior forecasts.
Barr said that “despite the wet summer weather which impacted quarter three market conditions, our positive underlying brand momentum ensured a strong second-half group performance.”
Impressively, Barr continues to grow volumes even as it increases prices on its winning brands to offset cost pressures. This makes it a rare case among industry players like Coca-Cola HBC, many of whom have reported lower physical sales on account of price hikes.
As an extra bonus, Barr is also watching its non-liquid products fly off the shelves right now. MOMA Foods — which the company took full control of in late 2022 — recorded double-digit sales growth last year.
Change at the top
This will all cheer Barr’s incoming chief executive Euan Sutherland, who it was announced today will take over from company veteran Roger White in May.
White, who had declared his intention to step down back in August, will be a hard act to follow. Barr’s share price has risen more than 450% during his tenure, which began in 2004.
But Sutherland, who was formerly chief executive of The Co-op Group, Superdry, and until late last year, Saga, has a boatload of experience with consumer-facing companies, which bodes well for the future.
A top FTSE 250 buy
Today’s update provides extra credibility to the City’s bubbly profit forecasts for AG Barr. Annual growth of 7% for last year is expected to accelerate to 10% in financial 2025, and then to 13% in 2026.
It’s no wonder that analysts are so upbeat about the drinks manufacturer. It has an excellent track record of product innovation, with new energy drinks leveraging its Rubicon and Irn-Bru brands selling especially strongly of late. And it has a packed pipeline of similar opportunities to grow sales.
Barr is also ramping up production to meet strong demand for its drinks and boost margins. Work on brand development is also ongoing to lift operating margins from first-half levels of 12.5%.
The soft drinks market is highly competitive. But this FTSE 250 manufacturer has proven it has what it takes to thrive and deliver bumper shareholder returns in the process.
I’ll be looking to add it to my own portfolio when I next have cash to invest.
