It Is Always Good To Have Options....

Truer words have never been spoken when it comes to the share market (and life!). I am increasingly finding a diverse portfolio is my best option; allowing me to pick and choose among different industries and offset each companies strengths/weakness to generate max returns. Like picking your favourite sweets. To this end I have been choosing different companies that I feel are good contenders to watch out for...

Fever-Tree Drinks (as at 08.07.18 Share Price: 3,376.10 / £33.76 per share)

• I am sure we have all heard of but they develop and supply premium mixer drinks within UK and export to over 50 countries. The drinks are popular and seem to have a fairly loyal following. In fact, the recent sugar tax does not appear to have had a huge effect - they have increased prices but no change in recipes and the popularity of Gin (different flavours and quirky gin bars popping up across London and further) has certainly helped.

• Slightly boring but very necessary; they have an excellent balance sheet: Debt:Short Term Assets 20.8x cover, Debt:Operating CashFlow 560.3% cover and EBIT 784.1x cover.

• Key metrics: 35% ROE (return on equity), 27% ROA (Return On Assets) and 41% (Return on Capital). Using a benchmark of 20% this is pretty good going.

• And their share performance? Within the last 12 months there has been an upward projectory and some price volatility; min price £16.75 max £34.28 (this time last year price: £17.07). Their current price per share is not cheap and possibly overvalued but sometimes the market is willing to pay more for a company where there is growth potential. With the overseas opportunities available, this could be very viable for Fever-Tree which could mean further sales growth and potential pricing power.

• People behind the company? They are mostly owned by institutions with an average management team tenure of 4.8 years.

• Current future predictions; 11.8% yearly earnings growth and 16.5% yearly growth in revenue. Interestingly, in the last 5 years, they have delivered >£20% YoY earnings growth.

I would personally be interested in buying a share to see how it performs within my portfolio over the next few months. Stay tuned for my next favourite picks and then of course there are the practicalities...