Graham Spooner, our Investment Research Analyst, explains why international distribution and outsourcing group Bunzl is share of the week this week:
Share of the week: Bunzl
Bunzl is a company best known for being a supplier of food packaging, hygienic clothing, paper and plastic disposables in 27 countries.
Bunzl's approach of making acquisitions to boost revenue and profit continues to work well. Indeed, it’s most recent results reported last week were ahead of expectations and again reflected on the contributions of such acquisitions, along with organic growth. This has led to improving dividends, with the dividend for the year rising by 11% to 42 pence, as well as strong share price performance.
Interested investors should appreciate that the company has a global presence, which has protected it from regions that have suffered more. Moreover, management have been keen to highlight its position as a market leader and the resilience of its mainmarkets, which should hold up well in difficult times.
This is a group that has continued to make steady progress despite difficult market conditions, suggesting management have a good business model. The shares currently appear to be fairly valued, but this is a well-managed business with defensive qualities and improving dividends. As a result we continue to recommend Bunzl as a long-term ‘buy’ for a lower risk balanced portfolio.
Since returning to the buy list in 2015 the share price has risen by around 24%. The shares, which hit an all-time high in August, before falling back post Brexit have once again started trending higher.
All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.