This attractive UK share is up 30% in a year but still cheap enough that I might buy it!

Oliver Rodzianko has discovered that this UK share that offers stability, growth and good value. Will he add it to his portfolio?

| More on:
Businessman use electronic pen writing rising colorful graph from 2023 to 2024 year of business planning and stock investment growth concept.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Typically, I don’t expect a high-growth UK share to be good value as well. But I think meat, pastry and sandwich retailer Cranswick (LSE:CWK) fits both bills.

The stock is up just shy of 30% in the last year and a brilliant 237% over the last 10 years. As far as FTSE 250 companies go, I think this one could be a great addition to my portfolio.

Despite a price gain over the last decade that’s massively higher than the FTSE 250’s mere 19% growth over the period, Cranswick isn’t exactly a hot stock in the news. That’s a good thing in some ways because it means I can find a good deal before others catch on.

The meat business

Most of Cranswick’s revenue comes from the UK, with just another 2.2% coming from continental Europe and the rest of the world. Also, 99% of its money comes from selling food.

Crucially, the company is focused on sustainability in its farming processes. This increases its long-term prospects at a time when ethical production around animal products is under more scrutiny.

As of the last annual report, it mentioned it had “22 well-invested, highly efficient facilities in the UK”.

Of its major competitors, three stood out to me as particularly strong contenders for Cranswick’s market share:

  1. Boparan Holding Limited (2 Sisters Food Group)
  2. ABP Food Group
  3. Hilton Food Group

To focus on a company that’s publicly traded, Hilton Food Group seems a viable alternative investment option to Cranswick. So, I compared the two on earnings per share over time, a key indicator of profitability:


In Pence – Hilton, Yellow – Cranswick, Blue – Source: TradingView

Clearly, Cranswick provides more net income. But which of the two companies brings in the higher percentage of revenue as earnings?


Hilton, Yellow – Cranswick, Blue – Source: TradingView

Cranswick clearly wins on both fronts and by quite some way. Bear in mind, I think these are both great companies to have a stake in, so considering Cranswick is that much more profitable, it really stands out as a hot pick to me.

Every investment has risks

By looking deeply at the company’s annual reports and investor relations, I came across its risk management framework.

The firm has outlined one of its core risks as being subject to reputational damage. That would be as a result of adverse media. Largely, it attributes this to “alleged animal welfare incidents, protests, vigils or other operational challenges”.

Also, as almost all of its revenue comes from the UK, it notes that a “deterioration in the UK economy, or a change in food consumption patterns could lead to a fall in demand for the group’s products”. That’s a result of its low geographic diversification, something Hilton Food Group has much more of.

While these are just two risks of several Cranswick outlined in its report, I think it shows two crucial ones I need to consider if I invest.

Why I think it’s still cheap

At the moment, the shares have a price-to-earnings ratio of around just 16. That’s low considering how fast its stock price has been growing over the last year and its track record over the past 10.

Now, I don’t think there’s a massive safety net in price here, but Cranswick is cheap enough for me to put it on my watchlist.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Oliver Rodzianko 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.

More on Investing Articles

happy senior couple using a laptop in their living room to look at their financial budgets
Investing Articles

Investing freedom — but inside a pension

Strapped consumers might be cutting back on investing, but they’re still keeping up their pension contributions. The only problem? A…

Read more »

Mature Caucasian woman sat at a table with coffee and laptop while making notes on paper
Investing Articles

Forget gold! I’d rather buy these 3 FTSE high-yielders in a Stocks and Shares ISA

Gold looks like a risky investment to me as the price hits an all-time high. I'm ignoring the fuss to…

Read more »

Young female business analyst looking at a graph chart while working from home
Growth Shares

This 55p UK stock could rise more than 300%, according to a City broker

This UK stock has fallen from above 800p to below 60p. But analysts at Citi believe it’s capable of a…

Read more »

Businesswoman analyses profitability of working company with digital virtual screen
Investing Articles

I think this FTSE 250 trust has all the right ingredients to lock in long-term profits

Today I'm examining the prospects of a private equity investment trust on the FTSE 250 that caught my attention recently…

Read more »

Young black man looking at phone while on the London Overground
Investing Articles

2 under-the-radar UK shares investors should consider snapping up

Two UK shares have caught the eye of our writer. She explains why investors should be taking a closer look…

Read more »

Investing Articles

Are these 2 ultra-high-yielding income stocks a good buy for me?

These two income stocks often split the debate amongst investors. So what does our writer think of them as potential…

Read more »

Senior woman potting plant in garden at home
Investing Articles

5% yield! This dividend stock could be great for my retirement

Our writer explains why this dividend stock appeals to her as she’s investing to build wealth to enjoy in the…

Read more »

A young Asian woman holding up her index finger
Investing Articles

I’d aim for a second income of £1,000 a month with this super-reliable dividend stock

I think a great way to build a second income stream is by investing in dividend stocks via a Stocks…

Read more »