these stocks may be cheaper than they look – and they’re barely expensive anyway


Update: AG Barr

Frustratingly enough, shares of soft drink maker AG Barr refuse to shine, even though first-half numbers last week showed marked improvement in sales and profits, as well as a return to the dividend list. We gratefully collect the 12p per share of ordinary and special dividends due October 29 and it should be worth keeping after that.

Carbon dioxide and transport capacity shortages, as well as pressure on input costs, are all legitimate concerns, but it may not be profitable to exaggerate the gloom. Management still expects operating margins to exceed last year’s levels and the company’s carefully cultivated brands such as Irn-Bru, Funkin and Rubicon could provide some pricing power. and therefore some protection against cost increases.

They helped the Scottish company get through the last carbon dioxide shortage three years ago, as well as the launch of the sugar tax that same year, after all. An expected price-to-earnings ratio just north of 20 may not seem overly cheap, but AG Barr’s track record of double-digit operating margins and returns on capital pleads for patience. It’s worth hanging on, despite the flat response to the interim.

Quaestor says: hold on

Symbol: SAC

Closing price: 530p

Russ Mold is Director of Investments at AJ Bell, the stockbroker

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