Coca-Cola Europacific, today's pick for IBD 50 Stocks To Watch, has climbed to the upper reaches of a buy zone while sitting in the top five of its nonalcoholic beverage stock group.
U.K.-based Coca Cola Europacific makes, distributes and sells drink brands such as Coke, Fanta, Sprite, Monster, Glaceau Smartwater and Nestea throughout much of Europe and Iceland.
This beverage stock doesn't have the traits of a rip-roaring growth stock that routinely delivers market-beating price gains. But with growth stocks still struggling to shake off their bear-market shackles, Coca-Cola Europacific could be the kind of consumer staples stock that attracts investors with upward progress in a volatile world.
Fundamentals Of Beverage Stock
Fundamentally, CCEP stock has decent numbers, which result in an Earnings Per Share Rating of 85. Earnings rose 29% in Q3, contributing to a 30.2% average gain in the past three quarters, according to IBD Stock Checkup. A flaw is that analysts expect current-quarter earnings to drop 20% to 73 cents a share from 92 cents a year earlier, according to consensus forecasts from analysts tracked by FactSet.
Annual earnings also have bright spots marred by blemishes. EPS growth averaged a mere 9% in the past three years, though last year featured a 53% rebound from pandemic-era softness. For this year, Wall Street sees EPS climbing 11% to $3.59 a share, then growing 7.2% to $3.85 in 2023.
Analysts see the beverage stock's Q4 sales increasing 29% to $4.4 million, accelerating from 1% growth in Q3. They forecast a 17% increase to $18.28 billion for all of 2022 and 6% growth in 2023.
The beverage stock also has a strong IBD Sales, Margin and Return on Equity Rating of A.
Coca-Cola Europacific's relative strength line, which measures a stock's performance against the S&P 500, is in new high ground. That's a favorable sign for a stock as it breaks out of a base. So is its Relative Strength Rating of 91.
In another show of strength, the beverage stock carries a solid Composite Rating of 95, not far from the highest-possible 99.
In recent weeks, CCEP stock has twice visited the upper regions of a buy zone that tops out at 56, or 5% above its base's buy point.
The beverage stock broke out of a cup-with-handle base on Dec. 1, according to MarketSmith chart analysis. The buy point is 53.35. After a downward feint just below the entry on Dec. 6, Coca-Cola Europacific has been trending higher, defying market weakness.
