Tuesday tips round-up: Greggs, Cohort
The fortunes of Greggs seem to have taken a turn for the better. Its latest trading update was a positive surprise, it actually showed growth in like-for like sales accelerating to a 5.4% clip over the 11 weeks to 13 September. That comes after three profit warnings since the previous chief executive, Ken McMeikan, who constantly blamed weather – be it to hot or too cold – for missing his targets, stepped down at the end of 2012. Indeed, the weather has been benign of late, which is important. Nevertheless, the company has also modified its marketing strategy substantially.
Aerospace and Defence
11,805.18
16:44 09/01/25
Cohort
1,140.00p
16:45 09/01/25
Food & Drug Retailers
4,444.64
16:44 09/01/25
FTSE AIM All-Share
719.96
17:04 09/01/25
FTSE All-Share
4,517.93
17:05 09/01/25
FTSE Small Cap
6,760.34
16:49 09/01/25
Greggs
2,210.00p
17:15 09/01/25
The firm embarked on a refurbishment programme of its 1,700 shops, axed its in-store bakeries, to provide for seating. Food cost deflation has also contributed to margins and allowed the firm to improve the quality of its product range. The decision to go head-to-head with chains such as as Costa Coffee and Pret A Manger has also proved a wise one, as the food-to-go market is expanding rapidly. Little surprise then the share price has been doing so well of late, but at 17 times’ earnings the valuation looks high enough for an outfit that will always be reliant on discretionary spending. Avoid, says The Times’s Tempus.
Cohort, which manufactures sophisticated equipment for the defence sector, mainly Britain’s, is in a sweet spot. There seems little that might go ‘right’ in geopolitical terms that might see business dry up. One of its products, for example, reconnaissance drones, have just returned from a mission in Afghanistan, but will likely soon be redeployed.
The company recently did away with its troublesome space operations, which helped first half net revenues to growth of 13%, with margins picking up in other areas. Combined, that provided a 34% boost to operating profits, to reach £2.5m. The firm has also picked up a couple of bolt-on acquisitions along the way, which saw the order book improve to a record £146.6m at close of period. Given that its highly specialised products are a “must have” for those defence programmes, the company is a bit of a “one-off”. The stock is one “worth tucking away,” Tempus wrote.