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Bunzl (LSE:BNZL) has been one of the worst-performing FTSE 100 stocks of 2025. But I think its latest trading update suggests things might be much more positive in 2026.
I’ve been buying the stock as it’s fallen 35% since the start of the year and it’s already a big part of my portfolio. So should I carry on or look to diversify with other opportunities?
Q4 trading
The stock market didn’t like Bunzl’s Q4 trading update very much, sending the share price down 7%. That surprised me, but it recovered to finish the day down less than 2%.
When I looked at the report, I didn’t see much to feel particularly strongly about one way or the other. The firm lowered its 2025 guidance in April and results are in line with this forecast.
The outlook for 2026 is mixed. Bunzl is expecting operating margins to contract slightly as tough macroeconomic conditions persist, but it does anticipate sales returning to growth.
For the time being, acquisitions are going to continue to be the main force driving revenue growth. And while that might put some investors off, I don’t see it as a big concern.
Long-term investing
As a distributor of consumables, Bunzl is always likely to experience ups and downs as economic conditions change. But I think the long-term trajectory for the company is upwards.
It’s fair to say the firm’s strategy of growing through acquisitions is a divisive one. And there’s definitely a risk of overpaying for a business, which can be destructive to shareholder value.
My view, though, is that not all acquisitions are the same. Ones that are smaller and fit into a company’s existing operations are less dangerous than ones that are larger and separate.
Bunzl has a good track record of the former type of acquisition and a fragmented industry means I expect this to be a source of long-term growth. So what should I do about it?
Portfolio building
My long-term investment thesis for Bunzl is still intact. The firm’s scale means it can supply products more quickly and reliably than its competitors, which is a clear benefit to customers.
The company is also set to return a lot of cash to investors. It’s just completed a £200m share buyback and plans to use £700m next year for acquisitions or shareholder returns.
For me, the main issue is that (despite the recent declines) it’s already the second-largest stock in my ISA. And adding to it risks unbalancing my portfolio.
That’s something I’ll need to think carefully about when I’m next in a position to buy shares at the start of January. But if the stock stays where it is, it’ll be hard for me to resist.
Recovery signs
I think Bunzl’s forecast for revenues to get back to growth in 2026 is a very positive sign. Most of all, it’s a clear indication the company can move on from this year’s operational issues.
Ongoing macroeconomic issues might well present a challenge in the year ahead. But I’m inclined to see this as a short-term opportunity, rather than a long-term threat.
In my view, Bunzl is exactly the kind of stock investors should be looking seriously at in the New Year. And I think the FTSE 100 has more opportunities like this one.
