Shares in food company Cranswick (LSE: CWK) have been given a boost today by a positive set of half-year results. In fact, revenue increased by almost 10% which is ahead of management’s previous guidance and a key reason for this was strong growth in exports to Asia. Sales to the region rose by 17% and, alongside a stabilisation in pig prices, Cranswick’s adjusted profits increased by 22% versus the same period of last year.
Despite Cranswick booking a £4.6m impairment charge for its newly acquired Benson Park poultry division, a fall in pig prices of 2% during the period made a positive impact on profitability. And, with net debt falling by 78% to £4.8m, Cranswick appears to be in a financially sound position through which to tap into rising demand for its products both in the domestic market and abroad.
Looking ahead, the company is forecast to increase its bottom line by 7% in the current year and, with it having delivered positive earnings growth in each of the last five years, it is a very consistent performer. Therefore, while its shares are not particularly cheap as evidenced by a price to earnings (P/E) ratio of 17.9, they could be a worthwhile purchase for investors seeking a relatively low risk stock for the long term.
Also having strong long term prospects is house builder Bellway (LSE: BWY). That’s because there remains a fundamental supply/demand imbalance in the UK housing market which the company is well-positioned on which to capitalise.
Certainly, an interest rate rise could dampen demand for new properties, while the increase in stamp duty for buy-to-let investors is likely to reduce overall demand for properties. However, with interest rate rises likely to be slow and steady and demand from owner-occupiers still due to be strong, the prospects for house builders such as Bellway remain very upbeat. Evidence of this can be seen in the company’s earnings growth forecast of 15% in the current year.
Despite such strong growth, Bellway trades on a P/E ratio of only 9.8, which indicates that an upward rerating is very much on the cards. And, with Bellway’s dividend set to increase by 14% this year, it is becoming an appealing income play, too, with it yielding 3.4% at the present time.
Meanwhile, buying a slice of Vodafone (LSE: VOD) seems to make sense. Not only does it have a superb yield of 5.1%, it also has improving growth prospects as a result of its shift in strategy in recent years.
For example, Vodafone has invested heavily in its European network; acquiring a number of discounted assets which have provided it with diversified income streams. And, with the Eurozone economy likely to have a more prosperous period owing to the positive effects of quantitative easing, such a move seems to now make sense.
Furthermore, with Vodafone moving towards being a quad play operator in the UK, it has the potential to grab market share and become a more dominant player in the wider media sector, which could add diversification and sales growth moving forward. As such, now appears to be a good time to buy the company for the long term, especially with growth of 20% in net profit due to be delivered in 2016.
