For the moment, it appears that the heat wave here in the UK has gone. However, I think there are still some hot options for August when it comes to FTSE 100 stocks. The UK economy is in a fragile state, though, so there are definitely companies that I want to avoid. Here’s my favourite pick, along with one I’m not keen on!
A strong FTSE 100 share
The company I like is Coca-Cola HBC (LSE:CCH). Over the past year, the share price is down 26%, but what impresses me is the company’s short-term performance. Over the past three months (when the broader market has struggled), the share price has jumped by 22%.
The reason why I think the stock could perform well even if the UK struggles is due to the diversified nature of the business. Sure, it does bottle a lot of Coca-Cola! But the firm also services third-party and even own-brand labels. This is across the soft drink and alcohol range. In this way, it has a broad reach of potential clients.
Exposure to Russia and operations in Ukraine have hampered share price performance earlier this year. I note that this is an ongoing risk. Yet it’s not big enough of a problem to put me off investing. For example, in 2021, Russia and Ukraine combined only amounted to around 20% of total volume.
Aside from fundamentals, I also note the 5.74% dividend yield currently on offer. This makes the stock of dual interest to me, partly for share price upside and also for income potential.
Too much of a gamble
The second share I’m staying away from is Entain (LSE:ENT). The global sports betting company has operations not just in the UK but also in Europe and the US. The share price is down 33% in the past year.
Unfortunately, I think that the UK market could suffer in the second half of the year due to the cost-of-living crisis. Having a punt on the horses or the football is something that I think many would cut back on when trying to tighten up spending habits.
Further, economic growth is slowing in the US, with data last week showing that it has entered a technical recession. Therefore, I think a reluctance to gamble is something that could impact all markets for Entain.
I also expect some negative impact to the business from the upcoming UK Gambling Act review. Any added restrictions relating to marketing or promotions to customers will act as a natural dampener on revenue going forward.
In the recent results from July, group net gaming revenue was up 18% for H1 versus the same period last year. This does show me that the business is resilient, even in the face of pressures. Further, with the men’s football World Cup later this year, there are plenty of opportunities to capitalise on revenue.