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I’m always wary of buying a growth stock after it’s had a storming run. I’m worried I’ll jump in just as it runs out of puff. I’d rather wait until it hits a bump in the road, and I can get in at a reduced price.
That strategy isn’t foolproof. I’ve missed a few top momentum stocks as a result. But over the long run, it’s worked out pretty well for me. It takes patience, though. Companies often need time to regain direction and momentum after things go wrong.
FTSE 100 distribution specialist Bunzl (LSE: BNZL) was on my watch list for years. The shares looked unstoppable, but then trouble hit.
Why did the shares suddenly plunge?
Bunzl built a fantastic long-term record supplying everyday essentials such as disposable cups, cleaning products, rubber gloves, and high-vis jackets to businesses around the world. It’s expanded aggressively, buying more than 200 companies over two decades.
Bunzl increased its dividend every year for more than 30 years, while revenues and profits climbed steadily too. Investors loved its sheer steadiness. Then came the shock.
On 16 April 2025, the Bunzl share price crashed 25% after it issued a profit warning and halted its share buyback programme. What went wrong? Quite a lot.
Bunzl lost a high-margin grocery customer in North America and struggled with the rollout of its own-brand products, while US tariffs and and slower economic growth further hit sentiment.
I’ve learned that the first profit warning often heralds further trouble, so took my time. I began drip-feeding money into Bunzl last September, and bought it again in October and December. Then sat tight.
Is the recovery finally gathering pace?
Bunzl shares are starting to motor again. They’re up almost 20% so far in 2026, driven by a 7% jump in the last week alone. The business recovery still looks tentative though. Full-year results (2 March) showed revenues rising 3% at constant exchange rates in 2025 to £11.8bn, but that was largely thanks to acquisitions.
Adjusted operating profits fell 4.3% to £910.3m. That was disappointing, given prior growth.
- 2025 – £910.3m
- 2024 – £976.1m
- 2023 – £944.2m
- 2022 – £855.9m
- 2021 – £752.8m
There were positives too. Bunzl generated £579m of free cash flow and achieved a cash conversion rate of 95%. The board also lifted the dividend again, albeit by a modest 2.7% to 74.1p per share.
Bunzl has absorbed US tariff worries, but what it really needs is a stronger global economy. If growth remains sluggish, as seems likely with the Iran war dragging on, progress could remain slow.
Personally, I still think Bunzl looks attractive after last year’s sell-off. The valuation has cooled considerably, with a price-to-earnings ratio of 13.8. The trailing dividend yield is 3%. I think it’s well worth considering for investors seeking a blend of income and long-term growth. But I accept there are racier FTSE 100 recovery stories around right now.
Should you invest £5,000 in Bunzl Plc right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Bunzl Plc made the list?
Harvey Jones owns shares in Bunzl.
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