Marks and Spencer

Marks and Spencer (LSE: MKS) is a major British multinational retailer that sells clothing and beauty, home, and food products. This week, three director dealings were carried out. A large number of shares were received in lieu of a cash dividend, but a portion was sold to cover tax and national insurance obligations.

• Name: Stuart Machin
• Position of director: Chief Executive Officer
• Nature of transaction: Free shares
• Date of transaction: 22 June 2022
• Amount received: 203,120 @ nil
• Total value: N/A

• Name: Stuart Machin
• Position of director: Chief Executive Officer
• Nature of transaction: Sales of shares to cover tax and national insurance liabilities
• Date of transaction: 22 June 2022
• Amount sold: 99,121 @ £1.37
• Total value: £135,805.68

• Name: Sacha Berendji
• Position of director: Property, Store Development, and IT Director
• Nature of transaction: Free shares
• Date of transaction: 22 June 2022
• Amount received: 138,115 @ nil
• Total value: N/A

• Name: Sacha Berendji
• Position of director: Property, Store Development, and IT Director
• Nature of transaction: Sales of shares to cover tax and national insurance liabilities
• Date of transaction: 22 June 2022
• Amount sold: 67,399 @ £1.37
• Total value: £92,343.37

• Name: Paul Friston
• Position of director: International Director
• Nature of transaction: Free shares
• Date of transaction: 22 June 2022
• Amount received: 131,691 @ nil
• Total value: N/A

• Name: Paul Friston
• Position of director: International Director
• Nature of transaction: Sales of shares to cover tax and national insurance liabilities
• Date of transaction: 22 June 2022
• Amount sold: 62,264 @ £1.37
• Total value: £88,048.11

Cranswick

Cranswick (LSE: CWK) is a leading UK food producer and supplier of fresh and premium food products. It’s most famous for its meat products. Four directors opted to exercise their share options this week. However, they then proceeded to sell portions.

• Name: Mark Bottomley
• Position of director: Chief Financial Officer
• Nature of transaction: Free shares
• Date of transaction: 27 June 2022
• Amount received: 31,800 @ nil
• Total value: N/A

• Name: Mark Bottomley
• Position of director: Chief Financial Officer
• Nature of transaction: Sale of shares
• Date of transaction: 27 June 2022
• Amount sold: 16,379 @ £30.82
• Total value: £504,768.02

• Name: Adam Couch
• Position of director: Chief Executive Officer
• Nature of transaction: Free shares
• Date of transaction: 27 June 2022
• Amount received: 48,100 @ nil
• Total value: N/A

• Name: Adam Couch
• Position of director: Chief Executive Officer
• Nature of transaction: Sale of shares
• Date of transaction: 27 June 2022
• Amount sold: 24,775 @ £30.82
• Total value: £763,515.95

• Name: Jim Brisby
• Position of director: Chief Commercial Officer
• Nature of transaction: Free shares
• Date of transaction: 27 June 2022
• Amount received: 31,800 @ nil
• Total value: N/A

• Name: Jim Brisby
• Position of director: Chief Commercial Officer
• Nature of transaction: Sale of shares
• Date of transaction: 27 June 2022
• Amount sold: 16,379 @ £30.82
• Total value: £504,768.02

• Name: Chris Aldersley
• Position of director: Chief Operating Officer
• Nature of transaction: Free shares
• Date of transaction: 27 June 2022
• Amount received: 26,300 @ nil
• Total value: N/A

• Name: Chris Aldersley
• Position of director: Chief Operating Officer
• Nature of transaction: Sale of shares
• Date of transaction: 27 June 2022
• Amount sold: 13,546 @ £30.82
• Total value: £417,460.628

HomeServe

HomeServe (LSE: HSV) offers low-cost home warranty and home repair options. It markets itself as the solution to expensive and inconvenient emergency home repairs. Three massive director dealings happened earlier in the week, as shares were awarded to these directors based on performance conditions.

• Name: David Bower
• Position of director: Director
• Nature of transaction: Free shares
• Date of transaction: 27 June 2022
• Amount received: 21,119 @ nil
• Total value: N/A

• Name: David Bower
• Position of director: Director
• Nature of transaction: Free shares
• Date of transaction: 27 June 2022
• Amount received: 10,190 @ £11.69
• Total value: £119,121.10

• Name: Tom Rusin
• Position of director: Director
• Nature of transaction: Free shares
• Date of transaction: 27 June 2022
• Amount received: 30,619 @ nil
• Total value: N/A

• Name: Tom Rusin
• Position of director: Director
• Nature of transaction: Free shares
• Date of transaction: 27 June 2022
• Amount received: 11,815 @ £11.69
• Total value: £138,117.35

• Name: Richard Harpin
• Position of director: Director
• Nature of transaction: Free shares
• Date of transaction: 27 June 2022
• Amount received: 34,911 @ nil
• Total value: N/A

Types of shares in a SIP

To provide context, there are a few types of shares within a company’s share incentive plan (SIP). A SIP is an employee plan for companies within the UK to flexibly award equity to employees. Publicly listed companies normally exercise this option because it’s tax-efficient for both the employer and its employees.

In this instance, all the director dealings above occurred with free shares. These shares were acquired by directors under their companies’ share plans. These were either a restricted share plan (Marks and Spencer), or incentive plans (Cranswick and HomeServe).

Share award schemes give employees actual shares rather than share options. The value of shares given to directors here is treated as employment income. This means that it may be subject to tax and national insurance contributions. That is unless the directors opt for an HMRC-approved share scheme, which has its own rules and requirements. Incentive plans give directors shares when they hit certain performance targets. For HomeServe directors, the awards were subject to the company’s earnings per share.

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John Choong has no position in any of the shares mentioned. The Motley Fool UK has recommended Tesco. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

One way of separating the wheat from the chaff is to look for companies that have better-than-average records of consistently raising their bi-annual payouts.

Here are three examples, all of which come from the FTSE 250 and probably remain under the radar of many private investors.

Cranswick

Meat supplier Cranswick (LSE: CWK) is a great passive income stock, in my view. The company has a long history of growing its annual cash returns to investors. In fact, hikes in recent years have often been by double-digit percentages. So while no dividend stream can be guaranteed, this is exactly the sort of form I’m looking for.

Based on recent trading, I have no concerns over this trend continuing. In its most recent update, the FTSE 250 stock said trading over the festive period has been “comfortably ahead” of the same time in 2020. This was despite “unprecedented industry-wide labour and supply chain challenges” and cost inflation.

Will we still be talking about these headwinds in a few years though? I sincerely doubt it. 

As good as the dividend hikes have been, Cranswick is a fairly low-margin business. Admittedly, the 2.2% forecast yield isn’t all that generous compared to others in the UK market either. 

Still, the amount of free cash flow (essentially, what allows a company to pay passive income to holders) is looking very healthy indeed. This makes me believe the company will continue growing its dividends in the years ahead. 

Bodycote

Heat treatment and thermal processing specialist Bodycote (LSE: BOY) is another FTSE 250 member that’s been increasing its annual payouts to investors for a long time. This quality tends to be indicative of a very resilient company.  

As things stand, Bodycote is expected to yield 21p per share in FY22. That becomes a yield of 3%. Again, this fairly average return doesn’t bother me. I’d rather invest in a company where my passive income is likely to be paid and also increasing every year. 

The shares have fallen 20% in 2022 so far, which highlights how even solid dividend payers can be just as volatile as more growth-focused stocks. Headwinds, such as supply chain disruption and cost inflation, won’t go away overnight either. 

Nevertheless, Bodycote seems to be trading just fine. This month’s full-year results revealed a 7.1% rise in revenues to almost £616m. Operating margins also rose to 15.4%. 

Clarkson

Shipping services provider Clarkson (LSE: CKN) strikes me as another stock that many private investors might be unfamiliar with. Similar to the other two shares mentioned here, the £1.1bn-cap company regularly lifts its annual dividend. In fact, it’s been doing this for the last 19 years! 

A forecast 2.5% yield in 2022 is expected to be covered almost twice by profit. That last bit is important. The greater the dividend cover, the less likely it is that the payment will be cut.

On the downside, shares in Clarkson aren’t a bargain, at almost 21 times earnings. This potentially makes the stock a more risky buy.

Even so, the balance sheet looks pretty solid to me. Earlier this month, Clarkson also announced record underlying pre-tax profit of £69.4m for 2021. Maintaining this kind of form should allow the passive income to keep ticking higher.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Bodycote. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Reliable payer

Last year aside, drinks giant Britvic (LSE: BVIC) has a great track record of regularly hiking its dividends. That makes it attractive at a time of rising prices, since my buying power should be maintained (and potentially increased).

Right now, analysts have the business returning 27.8p per share in FY22 — a stonking 18% increase on that expected for the financial year just completed. 

Using the current share price, this equates to a decent yield of 3.1%. Although buying single company stocks traditionally involves more risk, it’s worth noting this is far more than the 1.9% offered by the index.

Aside from its income credentials, Britvic strikes me as a defensive option, thanks to its bumper portfolio of brands. Returns on capital have also been consistently good. And, thanks to exporting to more than 100 countries, earnings are about as geographically diversified as I could want.

Of course, there’s a chance global supply chain issues and ongoing investment will hit sentiment in the short term. So we could see a bit of selling pressure (and potentially a great opportunity to buy) when full-year results arrive on 24 November.

Meaty hiker

I doubt meat supplier Cranswick (LSE: CWK) hits many income investors’ radars. That’s understandable. A forecast yield of 2% doesn’t grab the attention quite like one offering fives times this amount does. However, I think this qualifies as a stellar dividend stock.

The fact is that CWK is an excellent source of rising cash returns with an average growth rate of over 13% per year. That’s impressive, considering capital expenditure in this (low margin) industry can often be pretty hefty.

In addition to its rising dividend stream, Cranswick has also delivered solid capital growth. Holders would have seen a 55% gain since October 2016. That’s better than the 32% achieved by the FTSE 250 index. Clearly, this margin will have been even greater had those dividends been re-invested. 

Since I doubt whether many people are prepared to give up their sausages and bacon any time soon, CWK should go on rewarding investors long into the future.

Volatility hedge

A final FTSE 250 dividend stock I’d feel comfortable buying today is one I’ve already held for a number of years. That’s online trading platform provider IG Group (LSE: IGG).

Now IGG may not be every investor’s cup of tea for a few reasons. For one, the industry in which it operates is always susceptible to regulatory scrutiny. It’s also fair to say that IG faces significant competition for clients. That’s despite it being the recognised market leader in the UK. 

As credible as these concerns are, I continue to regard this stock as a potentially great hedge against market volatility. When emotions run high (as they did last year), trading activity increases and IG benefits. That’s good news for revenues, profits and, ultimately, dividends.

Currently yielding a forecast 5.4% for the current year, analysts have predicted a 10% uplift to IG’s total payout in FY23. With free cash flow looking very healthy and a US market ready to tap, I don’t see this as unrealistic.

The post 3 FTSE 250 dividend stocks to buy and hold for years appeared first on The Twelfth Magpie.

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Paul Summers owns shares in IG Group. The Motley Fool UK has recommended Britvic. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Meaty sales

As you might expect, Cranswick is a carnivore’s paradise. It supplies pork, gourmet sausages, cooked meats, cooked poultry, hand-cured and air-dried bacon and gourmet pastry products to retailers both here and abroad. And business is good. 

In today’s Q1 statement, the company said revenue over the 13 weeks to 26 June was up 9.6% on last year, due in part to strong demand from retailers. The FTSE 250 member also said it had seen a “gradual but sustained recovery of the food-to-go and food service channel”.

Exports to the lucrative Far East markets were “well ahead” of sales over the same quarter in 2020 due to higher prices too.

Reasonable price

Looking ahead, Cranswick said its full-year outlook was in line with management’s expectations. That was never likely to send the stock soaring. However, the company’s share price was comfortably in positive territory this morning. Indeed, it’s now getting very close to eclipsing the previous price high of 4,200p.

Despite this, I think Cranswick’s stock still looks reasonably priced. A forecast price-to-earnings (P/E) ratio of a little less than 19, before markets opened, isn’t excessive. For this, I’d be getting a company that boasts a solid balance sheet. It’s also one that continues to invest for growth. With regard to the latter, it’s now successfully raised capacity at its poultry facility in Eye, Suffolk. Production at its new bacon facility in Hull has also commenced.

I’m also attracted to the consistently rising dividends. This tends to be indicative of a well-run, defensive business with predictable earnings.  

Potential threats

I suppose one potential threat to the business is the growing interest in products produced by the likes of US giant Beyond Meat. There’s certainly evidence to suggest that more people have embraced veganism in recent years. 

Having said this, committed meat-eaters are unlikely to make the switch to lab-grown substitutes quickly. Any concerns they may have about how Cranswick may go about its business may also be assuaged by the company retaining its Tier 1 status in the Business Benchmark on Farm Animal Welfare framework for the fifth year running. This essentially means that the FTSE 250 firm is highly regarded for its handling of animals. Interestingly, it is one of only four organisations in the world to receive this accolade. 

From a more general perspective, the argument that I could get faster growth elsewhere is likely true. However, this could require a higher level of risk. That would deviate from my ‘slow and steady’ strategy, especially if it involved buying stakes in headline-grabbing but unprofitable companies. It can often be the case that businesses no one is talking about make for better investments.

Still bullish

Cranswick’s stellar record of steadily improving its owners’ wealth over the years leads me to think that this would still be a great addition to my own growth-focused portfolio. Based on today’s update, the company’s track record, and fair valuation, I’d feel comfortable buying today.

The post This under-the-radar FTSE 250 stock looks great value to me appeared first on The Twelfth Magpie.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Beyond Meat, Inc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Will this recovery prove short-lived? No one can say with any certainty. What we can do, however, is prepare ourselves for all eventualities. This should include keeping a list of quality stocks to buy if things head south again. Here are two that feature on my own.  

FTSE 250 star

Hull-based meat supplier Cranswick (LSE: CWK) fell along with everything else last month as investors made a ‘dash for cash’ and sold anything they could. Since then, the share price has recovered to pretty much where it was in February.

At least some of the rebound is likely down to investors realising that the company is a probable beneficiary from the UK lockdown since it supplies food products to major supermarkets. While this boost may prove temporary, the company is also seeing great demand as an exporter due to the African swine fever that has decimated pig herds in China.

Aside from these growth catalysts, Cranswick is a well-run company. Operating margins may be slim, but the balance sheet looks fine and a record of consistently hiking its dividend smacks of management’s ongoing confidence in the business.

The only issue I have with the company at the moment is its valuation.

The shares trade on 23 times earnings. That’s not cheap relative to the market, nor Cranswick’s own average valuation over the last five years (20 times earnings).

As such, the FTSE 250 member stays on the watchlist for now. Should we see a resumption of market volatility as a result of a dreaded ‘second wave’, I’d certainly be interested in buying a stake.

Long-term growth

Also falling significantly in March was investment platform provider AJ Bell (LSE: AJB). Like Cranswick however, it too has recovered strongly, particularly following last week’s encouraging trading update.

Customer numbers rose at a record rate over the three months to the end of March with the company adding almost 21,000 people to its books. This brought the total number using its platform at the end of the period to just over 248,000.

For me, this is yet more evidence that AJ Bell could prove a winner for growth-focused investors. As well as tapping into the long-term trend of more people saving for their retirement, the company boasts an excellent balance sheet and a committed CEO in founder (and significant shareholder) Andy Bell. At £1.5bn, its market cap is also less than a quarter the size of FTSE 100 member Hargreaves Lansdown.

Once again, the only real negative I see in the investment case is the valuation.

A price-to-earnings (P/E) ratio of 44 is positively vertigo-inducing in the current climate, especially as its aforementioned rival trades on ‘just’ 26 times earnings. The latter also generates even higher returns on capital employed — something Terry Smith deems crucial when screening for potential investments.

I’ll pay up for quality, but I’ll try not to overpay when doing so. I’ll look to add to my current holding (purchased shortly after listing) if May brings more stock market misery.

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Paul Summers owns shares of AJ Bell PLC. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

And what a performer the food products supplier has been. Over seven years, the share price has risen around 240% at today’s 2,818p, driven by steady operational progress and generally rising earnings. Yet it was as high as 3,386p in the summer of 2018, falling back when growth in earnings looked like it had stalled.

“Strongly ahead” in the Far East

However, I think the correction has blown a little froth off the enthusiastic valuation the stock had attracted and it’s worth revisiting now. Indeed, today’s report reveals to us that trading in the first quarter to 30 June has been “encouraging” with revenue up 1.5% compared to the equivalent period the prior year against “strong comparatives.”

Exports to the Far East were “strongly ahead” because of demand from China after an outbreak of African Swine Fever in the region. And the firm is ploughing money back into the business to support further growth by adding new capacity and capabilities, and by focusing on improving operating efficiency. One example is the company’s new £75m poultry processing facility at Eye in Suffolk, which will “more than double” existing capacity. It’s set to be commissioned in the spring of 2020.

And the firm has been on the acquisition trail too, today announcing it has just bought Katsouris Brothers Limited, which it describes as “a leading Mediterranean food products business.” The initial cost of £43.5m was funded from Cranswick’s existing debt facilities, and there’s a further deferred contingent consideration of “up to” £7m payable “dependent on the future performance of the business” over the 14-month period to 30 September 2020.

Growth firmly on the agenda

There seems no doubt that Cranswick has future growth in mind, and based on the company’s performance in the past, I wouldn’t bet against it being successful again. City analysts have pencilled in a double-digit percentage increase in earnings in the mid-to-high teens for the trading year to March 2021.

Meanwhile, the forward-looking earnings multiple for that year runs near 18 and the anticipated dividend yield is around 2.2%. I think that valuation is fair considering that Cranswick has an impressive multi-year record of increasing its revenue, earnings cash flow and the dividend.

The firm has impressed me over the years with its consistency, which suggests operations have defensive characteristics and could be less prone to cyclical gyrations than some other businesses. The quality metrics have been good too, with the return-on-capital figure, for example, running just above 15%. To me, growth from a steady enterprise like Cranswick is more valuable than growth from more volatile outfits because it seems less likely to reverse direction later. I see the stock as attractive.

The post Should I buy this FTSE 250 stock, up 10% on today’s news? appeared first on The Twelfth Magpie.

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Kevin Godbold has no position in any share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

I’d say that’s still unlikely for now. That’s why I continue to like meat processor and FTSE 250 business Cranswick (LSE: CWK), even if its share price has been rather volatile since last October following years of solid gains.

Does the positive reaction to today’s full-year results indicate that now might be a good time to buy in? I’m inclined to think so. 

Big investment

Statutory pre-tax profit for the year to the end of March came in at £86.5m — a slight reduction on the £88m achieved in 2017/18. At £1.44bn, revenue was pretty much flat. 

As CEO Adam Couch commented, however, these numbers were achieved “against a backdrop of highly competitive market conditions and ongoing, Brexit-related, political and economic uncertainty” and following “three years of very strong growth”.  

Despite the slight drop in profit, there’s still much for prospective investors to like.

For one, like-for-like volumes of pork exported to Asia jumped 16.1% as a result of African swine fever ravaging China’s pig herds. According to the company, the damage done could last for a number of years. 

Less specifically, Cranswick continues to generate very decent returns on capital employed, a metric regarded by one of the UK’s best fund managers as extremely important. This came in at 18.4% for the last financial year. 

The company continues to boast net cash on its balance sheet, even if the £6.3m announced today is down from the £20.6m last year. The 4.1% increase to the full-year dividend (to 55.9p per share) was also nice to see.

Perhaps most importantly, Cranswick continues to invest in its assets to enable it to expand in the future.

A total of £79m was spent in 2018/19 to “add capacity, extend capability and drive efficiencies”. The firm is currently building a new poultry facility in Suffolk and recently completed a Continental Foods facility in Bury. 

For such a quality company with still-good growth prospects, I think 20 times earnings is a reasonable price to pay. 

One for the long term

Another FTSE 250 stock that I think could be a decent long-term buy is metrology firm Renishaw (LSE: RSW).

That’s despite the fact that its shares — like those of Cranswick — have been unsettled of late due to the company enduring a period of difficult trading and less demand for its products in Asia. 

Clearly, whether Renishaw’s share price changes direction or not will depend on whether conditions improve (not to mention the speed of a resolution to the ongoing trade spat between China and the US). It’s already had to cut guidance on revenue and pre-tax profit twice this year.

Taking this into account, I understand why some investors may want to hold off buying for now. 

That said, Renishaw’s seriously high returns on capital and operating margins shouldn’t be ignored. Nor should its £120.5m net cash position.

As we never tire of saying at the Fool, it’s the quality of a business that matters in the long run, not what the shares do in the near term.

It’s on my watchlist for now.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Renishaw. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Over the last 10 years, shares in the pharma group have risen by just 30%, compared to a 63% gain for the FTSE 100.

These figures don’t include dividends, but data provided by Morningstar indicates that over the last 10 years, Glaxo stock has provided an average total return (share price + dividends) of just 6.3% per year. The equivalent figure for the FTSE 100 over the same period was 9.3%.

Big changes are coming

Given Glaxo’s rather ordinary track record, you might wonder why I’m suggesting it as a potential buy. The answer lies in the changes set in motion by chief executive Emma Walmsley since March 2017.

The group’s diverse mix of pharmaceuticals, vaccines and consumer healthcare brands has been blamed by many in the City as a cause of underperformance. Simply put, many investors think the group lacks focus. Weaker divisions are supported by profits made elsewhere.

Ms Walmsley appears to share this view and has set a series of changes in motion that will see the consumer healthcare business combined with that of Pfizer. This joint venture will then be spun out into a new company at some point in the next three years.

Why buy Glaxo today?

At about 1,560p, the GSK share price is well below its five-year high of 1,700p+. The planned break-up should leave shareholders with a more tightly focused pharmaceutical business, with much lower levels of debt.  

The shares currently trade on about 13.5 times 2019 forecast earnings,with a 5.1% dividend yield. I believe the stock could deliver strong returns from this level as the group’s transformation plays out over the next few years. In my opinion, this could be a good time to buy.

Good company, wrong price?

One business I’ve rated highly for a number of years is FTSE 250 meat producer Cranswick (LSE: CWK). Back in October I said that I thought the shares looked expensive, based on forecasts for modest earnings growth.

News released on Thursday seemed to justify my caution. The firm warned that profit margins were likely to fall next year, due to the cost of building a new poultry factory and “a potentially challenging commercial landscape”.

Before this news was released, analysts were expecting the group’s earnings to rise by about 5% in 2019/20. My reading of this new guidance is that profits are more likely to be flat next year.

Cranswick’s share price fell by 13% on Thursday, as investors priced in the risk of slowing growth. However, the shares are still trading on around 17 times 2019 forecast earnings, with a 2% dividend yield.

I view this as a good, defensive business that could be a long-term holding. But I think the share price is probably still too high, given the weak outlook for growth. For now, I’m going to leave this one on my watch list.

The post Have £1k to invest? I think the GSK share price could crush the FTSE 100 this year appeared first on The Twelfth Magpie.

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Roland Head has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Of course, it’s not the only stock which could be of interest to investors seeking to retire early. Reporting on Tuesday was a FTSE 250 food producer which seems to have a relatively resilient business model.

Improving prospects

The stock in question is Cranswick (LSE: CWK). Its interim results showed that revenue and profitability increased marginally versus the same period of the previous year on an adjusted basis. However, it continues to invest heavily for the long term, with record capital expenditure of £41m being recorded as it seeks to provide a strong platform for future growth.

Its construction of a £60m primary poultry processing facility is under way. It has also commissioned a new £27m Continental Foods facility, while making significant investment in upstream agricultural operations in both pork and poultry. This should ensure supply chain integrity and sustainability over the medium term.

While Cranswick trades on a price-to-earnings (P/E) ratio of 18, it could still have investment appeal. The business has a strong track record of earnings growth, with double-digit earnings being recorded in each of the last three years. As such, and with the prospects for the FTSE 100 and FTSE 250 being uncertain at the present time, it may offer investment potential for the long run.

Changing business

Sainsbury’s may also be able to outperform the wider index and improve an investor’s chance of retiring early. The company’s decision to merge with Asda could create a stronger entity in the long run. Synergies and increased buying power are expected from the deal, and they could help to drive profitability higher in the next few years, while many sector peers struggle to cope with continued weak consumer confidence in the UK.

Clearly, competition in the industry is due to increase. Aldi and Lidl, for example, are not slowing down in terms of their store expansion, while the continued threat of online means that the efficiency of major supermarkets may be called into question over the medium term.

However, with Sainsbury’s forecast to post positive earnings growth in the current year and next year, it could offer an improving outlook for investors. A P/E ratio of 15 may not be especially attractive given the difficulties facing UK consumers. But with what seems to be a sound strategy which includes a clear catalyst as a result of the Asda acquisition, the stock may be able to generate impressive long-term share price performance in my opinion.

The post Could the Sainsbury’s share price help you retire early despite the rising State Pension age? appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Sainsbury (J). The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Spice up your life

Why that curious date? It marks 22 years between the Spice Girls releasing their first single Wannabe and the announcement of their reunion tour, and was calculated by online platform AJ Bell to explore how the best shares have fared since Scary, Sporty, Posh, Baby and Ginger entered our lives. It’s a worthwhile effort, given that the true rewards of investing are to be measured in decades rather than years.

Cranswick (LSE: CWK) rose a chart busting 3,156% based on share price growth alone. The stock won’t be on everybody’s radar although I recently examined this artisan food-to-fork meat producer and found that it has surfed the foodie wave rather nicely.

Who do you think you are?

The Bury-based food producer’s share price has risen from 90.6p in July 1996 to 2,945p today. If you had invested £10,000 as Wannabe hit number one, you would have picked up 11,037 shares which would now be worth a massive £325,039. 

I’ll tell you what every investor wants, what they really really want: hindsight.

Growth has remained pretty meaty (but not scary). It is up 407% as measured over 10 years and 161% over five (when McFly’s Star Girl was number one, apparently). It is down 10% in the last year but is in a bullish mood, recently commissioning a state-of-the-art products factory.

Say you’ll be there

The downside is that the £1.5bn FTSE 250 stock now trades at a premium valuation of 19.3 times forecast earnings and yields a relatively low 2%, but with cover of 2.6. Four years of successive earnings per share (EPS) growth are slowing, to a forecast 4% in the year to 31 March 2019, then 6% afterwards. I think Cranswick should continue bringing home the bacon despite the growth of veganism, although with a little less sizzle.

Second-best performer is Clarkson (LSE: CKN) which is up 3,000% in 22 years. The FTSE 250 shipping services provider’s long-term performance is good but it has done little to float investors boats lately, rising just 17% over the past five years.

Viva forever

Clarkson was scuppered by a profit warning in 2016 and again this April when management bemoaned a “challenging environment” in both shipping and offshore capital markets, and lower freight rates within the tanker market. This came as a shock as one month before it said 2018 would be a year of continued growth as core markets recovered. 

There was slightly better news in August despite an 18% fall in interim profits to £18m, as conditions picked up in the second quarter. However, macro-economic and political uncertainties have hardly gone away since then, and any slowdown in global growth or recession would knock Clarkson.

2 become 1

My colleague Peter Stephens reckons it could prove rewarding for those who can stand a bit of volatility, with EPS forecast to drop 12% this year then rebound 24% next. However, its pricey forward valuation of 24.3 times earnings, and forecast yield of 3.2% with cover of 1.3 takes the wind out of my sails. Like the Spice Girls, it may struggle to revive the glory days.

The post These 2 monster growth stocks have returned more than 3,000% in 22 years! appeared first on The Twelfth Magpie.

More reading

• Forget the State Pension. Here’s how to target real retirement wealth!

harveyj has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.