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This growth stock’s thriving despite Covid-19. I’d buy it in an ISA today

Companies that are responsible for keeping our cupboards stocked are popular safe havens in uncertain times like these. Fresh financials from rock-solid growth stock Hilton Food Group (LSE: HFG) released on Tuesday illustrate exactly why this is so.

FTSE 250-quoted Hilton provides the packaging that is essential in the sale of meat. Its indispensable operations underpinned today’s solid full-year release. It said that “the evolving Covid-19 outbreak has led to an increased demand for protein-based products produced by the group” and that its facilities “remain fully operational.”

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It added that “to date they have responded superbly and have risen to the challenge.”

Incidentally, for 2019 Hilton said that revenues had leapt 11% (in constant currencies) year-on-year to £1.81bn. As a consequence, adjusted pre-tax profit swelled 10.2% on the same basis, to £49.7m.

A rare treat

Hilton’s performance has been so encouraging in the face of the coronavirus outbreak that it resisted the temptation of slashing the dividend. It kept it on hold at 21.4p per share instead. With dividend cuts coming left, right and centre from elsewhere, this is cause for some celebration.

The packaging powerhouse said that it had applied “significant downside sensitivities” to its cash flow forecasts related to the Covid-19 crisis. Even under its projected worst-case scenario it said that the company should “continue to operate well within its banking covenants and has adequate headroom under its existing committed facilities.”

As of December, Hilton had a hefty £110m of cash on its books. It also had current committed, but undrawn, loan facilities of £116m.

Sailing on

Clearly this Cambridgeshire-based growth share should have little to fear on the demand front. A consumer trend that is moving increasingly towards protein-rich diets has been exacerbated by the coronavirus outbreak.

Hilton’s main worry is the impact of a rising infection rate on its workforce and its supply chains. And this particular issue will remain unknown for a little while to come. But for the time being, the company looks in good shape to ride out any trouble.

It said that it has “established business continuity and flexible buy models and supply options” and that “there have not been any significant issues experienced to date” in securing material. The firm has around 40 different suppliers across the globe.

A great growth stock

It would be a mistake to consider Hilton just as a solid safe haven for these troubled times. The company, which operates in more than a dozen countries, remains committed to long-term expansion and recently opened new facilities in Poland and Australia. It is setting itself up to deliver brilliant growth over the coming decade and beyond.

City analysts expect Hilton to keep growing annual earnings in spite of the coronavirus outbreak. An 8% increase is predicted for 2020, giving rise to expectations of fresh dividend growth and thus a 2.4% yield. A forward price-to-earnings (P/E) ratio around 20 times is high on paper, but as a reliable lifeboat in bad times, I think Hilton is worth every penny. I think it’s a top buy right now.

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Royston Wild 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.