With only a few days left until the end of the year, I won’t have the cash to buy anything in my Stocks and Shares ISA. But recently something caught my eye as a chance for the New Year.

Last week FTSE100 distributor Bunzl (LSE:BNZL) saw its share price drop 7% on the day. The catalyst was the latest stock update, but it could have been my chance to buy a stock I had been following for some time.

What’s the news?

Bunzel’s last report was full of contradictions. Revenues in 2024 are expected to be slightly lower than the previous year, with results expected to be impacted by lower prices.

This is bad news, but there are positive elements hidden beneath the surface. Despite (or perhaps because of) lower prices, volumes remained high and acquisitions helped boost sales.

However, the outlook was much more positive. Bunzl expects more significant revenue growth in 2025, driven by both acquisitions and organic sales growth.

Moreover, the company forecasts stable margins. They are higher than before the pandemic and are expected to remain at this level until 2025.

My investment work

I want to buy shares at a price below £33 (just above that at the moment). At this level, the company’s market capitalization is just under £11 billion and at this valuation I see a path to a decent return.

Over the coming year, the company is expected to return around £200m of its market capitalization to investors, as well as pay a dividend at a yield of 70p per share. For starters, that’s a return of about 4%.

In addition, the company plans to allocate £700 million for acquisitions. If this translates into annual growth of 3%, there is a chance of a return of 7%, which I expect to boost over time.

Earlier this year, the Bunzl share price dropped to around £31, but I wasn’t determined enough to act. Having been given another chance in 2025, I am determined not to miss it.

Risk

The risk with Bunzl is that acquisition opportunities will either not materialize or be offered at too high a price. This would be a problem for the company’s development prospects.

The company believes it has a sustainable pipeline of opportunities, but even the best investors make mistakes in this regard. So the risk cannot be overlooked.

However, it should be noted that Bunzl has stated that it intends to return cash to shareholders if it cannot find companies to buy. And I think this is the right approach.

Unless the right opportunities arise, a capital return of £700 million would not be the worst outcome. At target prices, the annual return would be 6.3% with a dividend yield of 2.2%.

I buy dip

The time to buy shares in high-quality companies is when they experience a transient downturn. And I think that’s what’s happening with Bunzel right now.

I understand why investors might think buying a stock with a price-to-earnings (P/E) ratio of 22 when revenues are withering is a bad idea. But underneath the surface, I think if I don’t buy, I’ll be missing out.