Tuesday tips round-up: Cranswick, BHP BIlliton

Sausage maker Cranswick has managed to roll-out double digit sales and profits growth each year for the past decade. Sporting better returns on capital than US rival Tyson, yesterday the firm reported a 10% increase in fiscal-year pre-tax profits despite a poor UK retail market and falling prices for pork. Key to its success is its farm-to-store model and focus on the high-end. But the company is dependent on the UK. Furthermore, limits to growth on the Continent and Stateside means it must rely on its speciality divisions. Unfortunately, the company does not disclose profits by segment, the Financial Times´s Lex column points out.

That focus brings value with it is the thinking behind BHP Billiton´s decision to spin-off its operations in the more problematic commodities, such as aluminium, manganese and silver. The management of newly created South 32 will now be able to concentrate its efforts on micro-managing individual mines and product lines. In turn, that will free up BHP´s executive team to concentrate on its iron ore, oil and gas, coal and copper assets.

A potential bid from a predator such as X2 Resources might provide support for South 32´s share price. The company´s stock market debut was underwhelming, although institutional investors did not seem to have been put off. Nonetheless, the firm has been left in charge of commodities with some of the toughest cycles to manage. As well, the impact of China remains an unknown quantity. However, the skilled management team at the helm means that at the very least the shares are worth holding onto. Buy for the long-term says The Times´s Tempus.