ABF and BATS: 2 FTSE 100 consumer stocks to buy

HIGHLIGHTS

  • Consumer goods companies are viewed as non-cyclical and maintain stable growth rates regardless of the macroeconomic outlook.
  • The imposition of lockdowns and restrictions on movement forced consumers to stock up on essential goods and delay any non-urgent expenditure.
  • Established consumer goods companies with strong financials often succeed in luring investors keen on investing in stocks that offer regular returns.

The consumer goods sector comprises players engaged in the production and sales of items considered essential for daily use. Consequently, consumer goods companies are viewed as non-cyclical and maintain stable growth rates regardless of the macroeconomic outlook. Consumer products companies have been quick to innovate and launch products as per demands. Established consumer goods companies backed with strong financials often succeed in luring investors keen on investing in stocks that offer regular returns.

Here we take a detailed look at two trending consumer stocks to buy – Associated British Foods and British American Tobacco.

Associated British Foods Plc (LON: ABF)

Associated British Foods is a food processing and retailing firm based in the UK. It currently operates through 396 stores and 16.8 million sq. ft. of retail selling space compared to 16.0 million sq. ft. in the previous year. 

For the 16-week period from 28 February to 19 June 2021, the company’s total revenues recorded stood at £3,649 million, an increase of 47% compared to the same period last year.

The company’s sugar division registered a strong Q3 with revenues up by 21% compared to Q3 last year driven by strong volumes in China and Illovo and higher prices in Africa and Europe.

                                            

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ABF’s agriculture sales rose by 10% year-on-year in Q3 this year, fuelled by high sales in the compound feed business and higher soya, cereal and wheat prices.

Associated British Foods fixed an interim dividend of 6.2 pence per share payable 9 July 2021 to shareholders.

The shares of Associated British Foods traded at GBX 2,018.00, down slightly by 0.30% at 12:08 PM, and the market capitalisation of the company stood at £16,023.49 million as of 18 August 2021.

British American Tobacco Plc (LON: BATS)

It is a company with presence across globe, manufacturing and selling cigarettes, tobacco and other nicotine products.

The company’s revenues for the H1 ended 30 June 2021, reached £12,175 million, up by 8.1% compared to the same period last year driven by new category growth and recovery from the COVID-19 pandemic. The company’s profits from operations increased by 5.4% year-on-year to £5,235 million in H1 2021.

British American Tobacco had fixed an interim dividend payout of 215.6 pence per ordinary share for the year ended 31 December 2020. A dividend of 53.9 pence would be paid to shareholders as equal quarterly instalments in May 2021, August 2021, November 2021 as well as in February 2022.

The shares of British American Tobacco traded at GBX 2,706.50, up by 0.11% at 12:13 PM, and the market capitalisation of the company stood at £62,012.40 million as of 18 August 2021. The shares have given one-year return of 5.11% to the shareholders.

CONCLUSION:

Consumer goods products include food, household goods, hygiene products, beverages, and other essential items that individuals are either unable or unwilling to reduce from their budgets even in case of financial uncertainty. The COVID-19 pandemic has been proof of this trend. The imposition of lockdowns and restrictions on movement forced consumers to stock up on essential goods and delay any non-urgent expenditure.

Players operating in this space, therefore. have the edge over the other sectors. Investors looking to invest in stocks that offer regular returns and increase in value over time should invest in well-known consumer stocks.

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