Stock market confidence is gradually improving as we head into May. The Covid-19 crisis remains a fluid one and sentiment could easily crumble once again. But with lockdown measures in Europe and the US easing, building on similar action from Asian nations, it’s possible that recent share index rallies could extend into May. I for one am scouring UK share markets for bargains to buy for my ISA.
One share I think could continue rallying is Premier Foods (LSE: PFD). The food manufacturer’s share price has actually risen despite the broader share price market crash that began in late February. It’s a reflection of the company’s ultra-defensive operations and the release of some terrific trading information in that time.
The small cap’s most recent financials last week revealed that sales jumped 3.6% in the three months to March. Turnover jumped 10.5% in the final month of the period. This reflects the panic buying that emerged across all Britain’s supermarkets (as well as those abroad) as pandemic fears ballooned. It’s no surprise that the Hertfordshire firm says that full-year results will come in at the top end of guidance, then.
Now Premier Foods advised that sales volumes have cooled from the outstanding levels of last month. But the business still expects demand for its products to remain higher than normal. “This reflects more meals being eaten at home than usual due to recent measures set out by HM Government and hence increased demand for the group’s product ranges,” the company says.
It’s likely that news from this ISA contender will remain white-hot for some time yet, then. I expect full-year results on 14 May will reveal that its products have continued flying off the shelves.
Don’t be mistaken in thinking Premier Foods is a mere flash in the pan, however. The revenues generated by its brands have a knack of outperforming the broader UK market and sales here have risen for eleven quarters on the bounce. This is despite the rising pressure on consumers’ wallets that has, in turn, exacerbated the discounting strategies of the country’s supermarkets.
A top ISA buy
The record pays testament to Premier Foods’ packed basket of much-loved brands. Its Batchelors instant meals, Oxo gravy and Homepride cooking sauces can be found in cupboards the length and breadth of the land. Its Mr Kipling cake ranges have remained the jewel in the company’s crown, though, sales of which have boomed by double-digit percentages in recent quarters. And they should continue to do so thanks to heavy marketing and product investment.
Premier Foods’ share price was recently dealing at multi-year highs around 46p per share. However, its low forward price-to-earnings ratio of around 5 times provides scope for more share price gains in the weeks and months ahead. This is a share I’d happily add to my own Stocks and Shares ISA.
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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.