With emerging markets expected to outperform globally in 2024 and consumer products like Coca-Cola gaining traction, Coca-Cola bottlers such as Coca-Cola EuroPacific Partners (NYSE: CCEP) are an excellent group to invest in. Not only do they provide exposure to international and emerging markets, but they trade at a discount to the parent company and pay equally attractive dividends. 

In the case of Coca-Cola EuroPacific Partners, the dividend yield is better than The Coca-Cola (NYSE: KO) and is growing. Investors may not expect to see the same consistency with payouts and growth as with KO, but it is a reliable payment worth more than 5% in 2023 compared to about 3% for KO. Add in a history of outperforming The Coca-Cola Company’s stock return and group-leading strength in sales, and this stock is on track to hit new highs in 2024. 

Coca-Cola EuroPacific Partners has a stable quarter

Coca-Cola EuroPacific Partners had a solid Q3, with pricing gains more than offsetting a downtick in volume. Volume fell by 4.5%, offset by a 9% increase in cost per unit, to drive a 1.5% increase in total revenue, 4.5% on an FXN-neutral basis. Sales were impacted by wetter-than-expected summer weather and a downtick in away-from-home sales categories, but results are strong given the tough comps to last year. 

Last year, sales rose more than 20% on a double-digit increase in volume, so a little giveback is nothing to worry about. Looking forward, the company expects its 2023 momentum to carry into the end of the year and reaffirmed its guidance. The guidance calls for a high-single-digit gain in 2023, and analysts expect to see a similar figure in 2024. 

Earnings were also solid. The company’s efforts to sustain margin via price increases and operational efficiency led to an increase in the dividend. The interim 2nd half dividend was increased by nearly 10% to maintain a rough 50% payout ratio relative to earnings. The 2023 payout is worth more than 5% to investors and can be expected to grow again in 2024. The ex-dividend date for Q4 2023 is November 16th, so there is still time to claim it this year. 

Analysts are riding the CCEP train and view it as undervalued 

Coca-Cola EuroPacific Partners is a lightly valued company in more ways than 1. It trades in alignment with the broad S&P 500 at roughly 15.5X earnings. Still, it is undervalued compared to The Coca-Cola Company’s 21X and a similar valuation for Fomento Economic Mexicano (NYSE: FMX), parent of FEMSA (NYSE: KOF), which also trades near 15X. In this light, a dual position in CCEP and KOF would provide global exposure to the Coca-Cola brand at a 35% discount to the parent company with a much better yield. 

Regarding the analysts, they’ve been upping their targets all year and see this stock trading about 12% above current levels. If reached, the consensus estimate is a new all-time high, and even the low price target assumes some upside. In this light, the stock is due for a rebound, and a 1 is forming on the charts. 

The technical outlook: CCEP bubbling to new highs 

Shares of CCEP have historically outperformed KO and will do so again in 2023. The stock is up about 5% YTD compared to a YTD loss for the parent company, and the technical setup is promising. The market confirmed support late in October, and a rebound began to gain traction following the Q3 update. Now, the market is heading higher, and it looks like it will retest an all-time high soon. The hurdle is the 150-day moving average, providing some resistance; if the market can surpass this level, a move to a new all-time high is probable. If not, shares of CCEP may retest recent lows before continuing its uptrend.