The weather channel doesn’t always get it right, but consensus is, this summer is going to be a long, hot, scorcher in Australia.
Weather conditions can wreak havoc on certain agricultural stocks who rely on rainfall to manage their crops, but while the likes of Australian Agricultural Company Ltd (ASX: AAC), Graincorp Ltd (ASX: GNC) and Webster Limited Fully Paid Ord. Shrs (ASX: WBA) struggle along on that front, these three shares are celebrating every day the mercury rages.
Coca-Cola Amatil Ltd (ASX:CCL)
Hot weather is good news for a $7 billion market cap company like Coca-Cola Amatil, whose core business is hinged upon the manufacture and distribution of carbonated soft drinks, bottled water and sports and energy drinks.
Coca-Cola’s share price has been tracking upwards steadily in the last 12 months – sitting about 20% above its share price point of $8.05 at this time last year to $9.65 at the time of writing.
An overly hot Australian summer, coupled with the usual Christmas celebration period, should see strong sales growth for the company in the next few months, although many investors are hard-pressed to get too excited about Coca-Cola with looming health trends labelling sugary drinks a no-no.
However, brand power is often enough to offset the types of anti-sugar campaigns that are the stuff of Coca-Cola’s nightmares and recognisable branding can go a long way when Australians are looking for something to quench their thirst during summer party season.
A2 Milk Company Ltd (ASX: A2M)
Another beverage company, A2 Milk, is a leader in the dairy product space, with a serious foothold in the baby formula market also.
The A2 Milk share price has seen better days – well down from its March highs of $13.17 to land at $9.31 at the time of writing – but a long hot summer could be just what the doctor ordered for this company.
A2’s rival Bellamy’s Australia Ltd (ASX: BAL) saw its share price sink down on a disappointing AGM update this week, with investors wary of slower China cross-border growth across its infant formula category.
But A2M still looks placed as a great buy and hold opportunity for investors, especially with its recent price pullback and a positive trading update last week revealing its share of the Australian fresh milk market has grown over the last quarter.
Goldman Sachs have a buy rating on this one right now.
Afterpay Touch Group Ltd (ASX: APT)
This one isn’t a beverage company, but it’s a fintech stock focused on making it easier for people to buy things, even if they don’t currently have the money to do so.
Afterpay Touch is already having a pretty good year with the uptake of its “buy now pay later” platform services translating into strong growth for the mid-cap and the Christmas period is likely to see more people give their credit cards a work out – music to Afterpay’s ears.
The Afterpay share price has seen some slumps of late, but with almost every major retailer in Australia now on its client list, you can bet it will be a good Christmas holiday period for a company which benefits from people buying things.
Afterpay’s expansion into the US and UK is also looking pretty solid and with its acquisition of UK’s Clearpay now starting to flow through, you can bet this company will be leveraging off any boost to the ecommerce market the silly season can bring.
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Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk and AFTERPAY T FPO. The Motley Fool Australia has recommended Coca-Cola Amatil Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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