Having four-bagged in value between last November and June of this year, shares in hybrid estate agent (a Neil Woodford favourite) Purplebricks (LSE: PURP) have lost some of their sparkle in recent months — not completely surprising considering the company’s most recent update.
In what must be one of the most concise trading statements I’ve ever read, the AIM-listed (and notoriously difficult-to-value) company announced in early November that it was “on-course” to meet its board’s expectations for the full year. That was it. No numbers for investors to chew on and no mention of how the company’s recent foray into the $80bn US market was faring.
Of course, there’s two ways of looking at this. Some investors may have appreciated the uncluttered approach taken — the old adage that ‘no news being good news’. Why complicate things?
On the flip side, the lack of detail may have been taken by some as an indication that progress on the company’s ambitious international growth strategy isn’t quite as strong as the market suspects. Add to this the prospect of a sustained wobble in the UK housing market — and the fact that Purplebrick’s top dogs have recently begun to offload shares — and it’s understandable if some investors are beginning to trim their profits.
Regardless of how loyal holders feel about November’s trading update, one thing’s for sure: this approach won’t be available to the Solihull-based business when it reveals its latest set of interim numbers on 13 December. As such, I think we could see a major move in the share price over the next few weeks. The only question is, in which direction?
Far more tasty
For those not willing to lose sleep over their investments, I think pork and poultry producer (and FTSE 250 constituent) Cranswick (LSE: CWK) is a far better growth pick, especially following today’s encouraging interim numbers.
At £714.6m, revenue jumped by 23% over the six months to the end of September, with like-for-like sales up by 18%. Thanks, in part, to its acquisition of CCF Ballymena, adjusted pre-tax profit came in 17.2% higher at £44.4m.
Great as these numbers are however, I think its the company’s plans for the future that were behind Cranswick’s rocketing share price this morning.
Having already invested a record £29m over the reporting period to “add capacity, extend capability and drive efficiencies“, CEO Adam Couch announced the company’s intention to build a “class leading” primary poultry facility in Suffolk. Due for completion in 2019, this will likely double Cranswick’s existing capacity while also providing further room for expansion. On top of this, management revealed its intention to upscale the Hull-based firm’s feed mill and hatchery operations to maintain its “fully integrated supply chain model” at a cost of £13m.
These developments, combined with “new product launches and retail listings“, make me even more bullish on Cranswick than I already was. In addition to having arguably more resilient earnings compared to the supermarkets it supplies, it’s also worth noting today’s 15.3% hike to the interim dividend as a further indication of just how confident management appears to be on the £1.5bn-cap’s outlook.
Indeed, the only downside to the company right now appears to be its rather high valuation of around 23 times forecast earnings. But for those comfortable investing at these kind of prices, Cranswick looks mightily impressive.
