Just below the UK’s premier FTSE 100 index is the FTSE 250. Is Cranswick (LSE: CWK) one of its best? Let’s take a closer look.
Food manufacturer
Cranswick is a British business supplying premium, fresh, and added-value food products to a variety of markets and sectors. Some of its products include pork, poultry, pasta, cheese, pet food, meats, and more.
So what’s the current state of play with Cranswick shares? As I write, they’re trading for 3,546p. At this time last year, they were trading for 2,974p, which is a 19% increase over a 12-month period.
The FTSE 250 index has been hurt by macroeconomic volatility in recent months. This has hurt many shares but Cranswick shares have been on the up, which is a good sign.
The positives and negatives
One of Cranswick’s best bullish traits is its defensive ability. This is linked to the fact that food is an essential staple as we must eat no matter the economic outlook. This ability should help the business remain steady in terms of performance during times of volatility.
Next, Cranswick has an excellent track record of performance. I appreciate that past performance is not a guarantee of the future. However, I can’t see into the future. So I base some of my investment decisions on how well a business has performed to date. I can see Cranswick has recorded revenue and profit growth for the past four years in a row. This is great as it supports investor rewards and growth too.
Finally, Cranswick shares offer a dividend yield of 2.6%, which is higher than the FTSE 250 average of 1.9%. However, I do understand dividends are never guaranteed. Furthermore, Cranswick shares aren’t the cheapest on a price-to-earnings ratio of 16. However, I’m happy to buy shares in a quality business at what I consider to be a fair price.
To the bearish aspects then. Cranswick’s short-term challenges include rising costs and weakened demand. Soaring inflation hasn’t just impacted customers when it comes to buying their food or paying their energy bills. Businesses have to contend with the same challenges. When costs rise, profits are squeezed. If Cranswick raises its prices, it could lose customers.
Linked to this, there has been a rise in supermarkets and retailers offering essential ranges that are viewed as alternatives to premium products. This could hurt Cranswick, at least in the short term. There’s no telling when the cost-of-living crisis may end, so this is an issue I’ll be keeping an eye on through Cranwick’s trading updates to come.
A FTSE 250 stock I’d buy
I do believe Cranswick is one of the best stocks on the UK’s second index. It has defensive attributes, a good track record and reach, as well as a passive income opportunity. The firm’s growth story to date is also enviable.
The next time I have some spare cash to invest, I’d buy some Cranswick shares for my holdings. Long-term growth and returns should supersede any short-term issues at present, in my opinion.
