UK stockpickers rate AG Barr a buy, Redcentric a sell and Saga a hold

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UK stockpickers rate AG Barr, Redcentric, Saga

Highlights

AG Barr reported half-year sales up 8.5 per cent to £247mn and pre-tax profit up 2.6 per cent to £36.1mn, with shares near 12-month lows and a forward P/E of 11.6.
Redcentric's sale of its data centre business funded a £90mn return to shareholders, but with flat revenue growth forecast to 2027 and a 13 times earnings multiple, valuation appears stretched.
Saga raised annual guidance as first-half revenue rose double digits, targeting £100mn underlying pre-tax profit and sub-two-times leverage before 2030, with shares up over 165 per cent in a year.

Company calls and investment case

As reported by the Financial Times, the latest weekly stock selections back AG Barr as a buy, rate Redcentric a sell and keep Saga at hold as investors weigh valuation, restructuring and earnings momentum across different UK sectors.

AG Barr is presented as a recovery opportunity after an 18-month push to diversify beyond Irn-Bru through acquisitions including Rubicon, MOMA, Fentimans and Frobishers. For the half-year to August 1, sales rise 8.5 per cent to £247mn, adjusted pre-tax profit increases 2.6 per cent to £36.1mn and net bank debt stands at £47mn.

The shares trade near a 12-month low, even as the company gains market share elsewhere in soft drinks and absorbs recent purchases. Its forward price/earnings ratio of 11.6 times estimated January 2027 earnings suggests a cheaper valuation than many larger consumer names.

Redcentric is viewed less favourably after returning £90mn to shareholders in July through the purchase of 35 per cent of its issued capital at 160p a share. The cash comes from selling its data centre business, with most returned to investors and the balance used to reduce debt.

The result is a more focused managed services business, but management expects revenue growth to be flat in full-year 2027, with adjusted cash profit only slightly higher. At 13 times forward earnings, the valuation is seen as too full for a company relying mainly on cost cutting to support profit growth.

Sector pressures and market implications

Consumer staples companies are facing tougher conditions as rising costs and weaker demand challenge the defensive growth profile that once defined the sector. In the U.S., staples now account for a record-low 4.6 per cent of the S&P 500, according to investment manager Bespoke Invest, while concerns over weight-loss drugs and changing consumption patterns add to pressure.

That backdrop is also affecting UK names. AG Barr’s Funkin cocktail brand sees sales struggle again in the first half of 2026 as pre-mixed drink competition intensifies, even though the wider business is performing more solidly through diversification and share gains.

Saga offers a different picture, with annual guidance raised after double-digit first-half revenue growth. The travel and insurance group says it expects to reach its medium-term targets ahead of schedule, with annual underlying pre-tax profit of £100mn and leverage below two times now in sight before 2030.

Within Saga, Ocean Cruise underlying profit climbs 38 per cent to £47.7mn, River Cruise profit rises 54 per cent to £6mn and holidays profit more than doubles to £6.6mn. Insurance broking profit is up 75 per cent to £15.9mn, while the shares trade on 13 times forward consensus earnings after rising more than 165 per cent over the past year.

Our earlier article on equities’ valuation reset explained why the case for owning stocks has strengthened as forecast earnings rose faster than share prices, pushing forward P/E multiples lower across major markets. It highlighted Nvidia as a clear example of profit growth making an apparently expensive stock look cheaper on forward earnings, while noting that the outlook still hinges on continued earnings delivery, especially linked to AI demand and related risks.

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