The UK’s flagship index is already off to a solid start, climbing by almost 5% since the start of January. Yet Premier Foods (LSE:PFD) has delivered almost three times these gains, continuing its multi-year recovery.

So should I be considering it for my portfolio?

A transformational turnaround

While the Premier Foods name may not sound familiar, its products and brands can be found in almost every household in Britain. This is the company behind supermarket favourites including Mr Kipling, Ambrosia, Sharwood’s and Batchelors, among many others.

For over a decade, the business was viewed by many institutional investors as a ‘zombie stock’, seemingly going nowhere. And to be fair, that was a pretty accurate description with an overleveraged balance sheet and a troubling pension deficit that crippled investments in growth initiatives.

But with new leadership taking over, the business has undergone a remarkable turnaround. Debt’s falling, the pension deficit’s fixed, and growth’s accelerating. The firm has even begun acquiring new brands through bolt-on acquisitions as well as ramping up efforts to penetrate new international markets in Australia and North America.

Yet, even after all this impressive progress and chunky share price returns, the price-to-earnings ratio remains unusually cheap, at just 12.9 versus the current industry average of roughly 20.

Seeing a defensive compounder with a mended balance sheet that’s hiked its dividend for four years in a row at an average annualised rate of 29%, all while trading at a discount, is a pretty rare combination. And it’s why Premier Foods is among my favourite under-the-radar picks right now.

What to watch

As impressive as Premier Foods has been in the last few years, most of the financial improvement has so far stemmed from initial restructuring efforts and balance sheet deleveraging. There’s no denying it’s been impressive to watch, considering the countless previous failed attempts.

However, moving forward, the company will have to prove its ability to deliver both top- and bottom-line gains. And while there are some early signs of this happening through its premiumisation strategy, growth’s still currently in the low single digits.

A big threat undoubtedly comes from supermarkets’ own-brand ranges. With many consumers feeling a financial pinch, these cheaper alternatives to branded products are becoming increasingly popular, putting pressure on producers like Premier Foods. And it’s the same story outside the UK, where competition’s only getting fiercer.

The bottom line

A boring business with low growth doesn’t exactly trigger much excitement, and it helps explain why the shares continue to trade at a cheap valuation — even after delivering impressive operational improvements.

But in my experience, boring’s often best. And with the firm’s latest bolt-on acquisitions performing better than expected, defensive investors may want to consider adding this hidden gem to their portfolios. I know I certainly am.

The post Here’s one of my favourite cheap shares to consider buying today appeared first on The Motley Fool UK.

When starting early, depositing as little as £100 a month can be all it takes to secure a much more luxurious retirement in the long run. But what about those starting later… much later?

An estimated one-in-six of people in the UK aged 55 and above don’t have any retirement savings beyond the State Pension. That’s despite it being nowhere near enough to live a comfortable retirement.

The good news is, even for a 60-year-old aiming to retire at 68, investing a good chunk of change in a SIPP each month can have a significant positive impact on retirement lifestyle. Here’s how.

Tax benefits + compounding

Unlike other tax-efficient investing vehicles like an ISA, any money put into a SIPP receives tax relief. In oversimplified terms, that effectively translates into deposits being topped up by the government, refunding any income tax previously paid.

Sadly, when starting this late in life, some near-term sacrifices are going to have to be made. And if an individual can put aside up to £1,500, that’s when things get more interesting.

Assuming a 60-year-old is paying the 20% basic tax rate, a £1,500 monthly deposit translates into £1,875 of investable capital each month. And if a portfolio matches the stock market’s long-term average return of 8% a year, doing this for eight years will grow a roughly £251,000 pension pot.

Following the 4% withdrawal rule, that’s enough to earn an extra £10,000 on top of the State Pension, providing a lot more financial flexibility.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Aiming higher

Following the upcoming hike to the UK State Pension in April, this extra £10,000 would generate a total income of £22,547.60 a year. But by using a stock-picking strategy, investors could end up with a lot more.

Instead of trying to match the stock market’s 8% annual average with index funds, investors can aim to beat it by investing directly into the best businesses. And over the last eight years, that’s something Premier Foods‘ (LSE:PFD) shareholders have experienced first-hand.

Since February 2018, shares of the branded food producer have been on a bit of a rampage following a strategic pivot under new leadership. Including dividends, investors have earned a 394% total return. That’s the equivalent of a 22.1% annualised gain – enough to transform £1,875 a month into £485,190, or an extra £19,408 in annual retirement income (almost double!).

Still worth considering?

With around 90% of British households buying at least one of Premier Foods’ brands each year, the company has enormous market penetration in the UK. And right now, management’s seeking to replicate this success in new territories like Australia and North America.

Of course, international expansion carries significant execution risk. Its new target markets already have a wide range of established brands that the group needs to disrupt – a task that’s far easier said than done. And if it fails to deliver, the firm’s long-term growth prospects could be severely limited.

Nevertheless, with the leadership demonstrating its savvy capital allocation skills in recent years, Premier Foods may still be worth a closer look for investors seeking to build retirement wealth in a SIPP today.

The post If a 60-year-old puts £1,500 a month into a SIPP, here’s what they could have by retirement… appeared first on The Motley Fool UK.

Having a hundred grand to kick-start an investing journey is undoubtedly advantageous. Yet, Buffett’s strategy and tactics are still applicable for even the tiniest of investors starting with just £500 today.

So how can new investors take this small lump sum and transform it into something far more substantial?

Two vital lessons

There are two key lessons from Buffett that every novice investor needs to know, in my opinion:

1. “Rule #1 is never lose money. Rule #2 is never forget Rule # 1”.
2. “Evaluate companies within your circle of competence”.

Not every investment Buffett has made has been a success. In fact, there have been some painful mistakes over the years. But by being informed, having some healthy scepticism, and avoiding speculative or reckless investments, the risk of making painful errors can be drastically reduced. That’s how Buffett applies his ‘Rule #1’.

The second bit of advice is equally as important. Investors don’t need to buy shares in complex bleeding-edge sectors like biotech or exploration-stage mining to make money. Instead, Buffett’s always stuck to the industries that are easy to understand. And some of his most successful investments, like Coca-Cola, have come from these simple sectors.

In other words, by investing exclusively in industries and companies that are easy to understand, investors can drastically reduce risk from ignorance.

Applying his teachings now

With all that said, what are some shares that new investors can consider for potentially solid long-term returns?

There are never any guarantees with any investment since even the most promising of enterprises have to navigate unique risks and challenges. Having said that, one UK Buffett-style stock that I’ve got my eye on right now is Premier Foods (LSE:PFD).

Premier’s business model is as straightforward as they come. It buys raw ingredients, manufactures food products, and then leverages its branding power to sell them at a premium. And today, 89% of British households buy at least one of its products each year, with an estimated 70% repeat customers.

In other words, the firm’s brands often find themselves on families’ weekly shopping lists. And with international expansion efforts underway in Australia, Europe, and North America, management‘s seeking to replicate its UK success abroad.

Is this a high-growth enterprise? No. Is it a highly cash-generative business leveraging its competitive advantages to steadily compound its bottom line? Yes. And with management shoring up the balance sheet over the last five years, the stock’s already more than doubled the performance of the FTSE 100 since 2020.

The bottom line

Premier Foods still has to deal with the threat of inflationary input costs. While having strong brands certainly helps in passing these costs to customers, weak economic conditions still present a challenge, resulting in both growth and margin pressure.

Nevertheless, with a proven competitive moat, a discounted valuation, and a long-lasting business model, Premier strikes me as a classic Buffett-style stock to consider. And it’s not the only one, I’ve got my eye on right now.

The post How to invest £500 in 2025 like billionaire Warren Buffett appeared first on The Motley Fool UK.

That certainly seems to be the case for Hikma Pharmaceuticals (LSE:HIK) and Premier Foods (LSE:PFD), which don’t have a lot of market buzz surrounding them. That’s despite one hiking payouts for 13 consecutive years and the other almost tripling its dividend since 2021!

Opportunities in pharmaceuticals

The last 12 months haven’t been very exciting for Hikma shares, with the generics drug manufacturer seeing its market-cap shrink by 13%. Investors have become concerned over margin pressure and guidance resets in its leading Injectables segment.

The group’s mainly suffering from an unfavourable foreign exchange headwind that’s seemingly knocked investor confidence over near-term goals. Yet while everyone is remaining focused on the short-term, the long-term outlook for Hikma continues to look rock solid, in my opinion.

Novel drugs, particularly within the GLP-1 space, are entering the market. And with an ever-increasing list of blockbuster drugs coming off patent over the next five years, the growth opportunities for this enterprise appear to be substantial.

So while the 3.9% yield may not be groundbreaking today, continued dividend hikes driven by successful execution could grow this payout into something far more substantial in the long run.

Underappreciated turnaround

Another enterprise that’s struggling to get attention is Premier Foods. The firm’s branded products can be found in almost every supermarket in Britain, commanding enormous market shares across multiple food categories.

Yet despite new management fixing the firm’s pension crisis, restoring the balance sheet and reigniting organic growth, the shares have been pretty flat lately.

Tepid investor sentiment has seemingly overlooked the firm’s rapidly expanding free cash flow generation, paving the way to higher shareholder payouts. So just like with Hikma, while the yield isn’t anything exciting today, that could quickly change over the coming years.

Risk versus reward

In my opinion, both UK shares exhibit impressive dividend growth potential. But that doesn’t mean they’re guaranteed to be winning investments. Despite operating in vastly different industries, both businesses do have a threat in common – competition.

Hikma’s US Generics business is already seeing intensifying pressure as other drug manufacturers seek to capitalise on expired or expiring patents. As for Premier Foods, economic pressure on households is pushing some consumers into the arms of cheaper private-label brands to reduce the weekly shopping bill.

In both cases, investors need to keep a close eye on the competitive landscape to ensure the dividend opportunity isn’t being compromised. But as things currently stand, Hikma and Premier appear to offer compelling passive income at reasonable prices. That’s why I’m already considering both for my dividend portfolio alongside other opportunities.

The post 2 overlooked UK shares to consider for dividend income appeared first on The Motley Fool UK.

So just how much money have investors been making since 2015? Let’s explore.

Performance of index investors

Looking at the UK’s flagship FTSE 100 index, the last decade’s been quite rewarding. Assuming investors were reinvesting all their dividends, the index has generated a 124% return, enough to transform a £20,000 initial investment into £44,782.

What about the FTSE 250? Performance here has been a bit weaker. Many of its constituents are reliant on the British economy, which hasn’t exactly been in rapid growth mode of late. As such, the total return over the same period stands at just 71.6%, turning £20,000 into £34,317.

Yet investors who expanded their exposure across all FTSE shares with the FTSE All-Share index enjoyed the best of both worlds, reaping a 117% total gain, enough to turn £20,000 into £43,400.

Performance of stock pickers

While the gains provided by the UK’s leading indices are certainly nothing to scoff at, they still pale in comparison to some individual FTSE shares.

Obviously, not every stock’s been a winner. And there have been plenty of losers that have harmed investor wealth. Yet, those who spotted winning businesses early have gone on to unlock pretty remarkable gains.

For example, since September 2015, the share price of Premier Foods (LSE:PFD) has climbed by a whopping 450%. When throwing in the extra gains from the recently reinstated dividends, the total return increases to 481%. And in terms of money, the same initial £20,000 investment as before would now be worth around £116,200!

Still worth considering in 2025?

As a quick reminder, the business is a leading food producer that’s responsible for several popular brands in Britain, including Ambrosia, Sharwood’s, and Mr Kipling, among others. Its market-beating performance stems from an impressive, successful turnaround executed by new leadership that saw the long-stagnant enterprise repair its balance sheet and restore organic growth.

That same strategy continues to be executed in 2025. The firms piggybacking off existing brands to launch new products, as well as searching for bolt-on acquisition opportunities to grow its brand portfolio. At the same time, the group’s increasing its international presence, particularly in Australia and Canada, opening the door to potentially substantial new growth opportunities in new markets.

Having said that, the company isn’t without its risks. Premier Foods needs a constant and steady supply of raw ingredients to manufacture its products, making it susceptible to input inflation risks.

Customer loyalty to its brands does provide some flexibility in pricing power. But with the rise of cheaper private label brands, the firm’s ability to pass on costs is likely limited, potentially resulting in margins being squeezed.

Nevertheless, with the shares still trading at an undemanding valuation even after rising significantly, investors may want to consider taking a closer look at this enterprise.

The post £20,000 invested in FTSE Shares 10 years ago is now worth… appeared first on The Motley Fool UK.

Could London’s second-most prestigious share index be about to fall, though? Given mounting uncertainty facing the domestic and global economies, and the FTSE 250‘s high concentration of sensitive growth shares, it’s something I feel savvy investors should at least be prepared for.

With this in mind, here are three top defensive stocks to consider in today’s climate.

A top trust

Real estate investment trust (REIT) Primary Health Properties (LSE:PHP) has a number of qualities that could help protect it during economic downturns. As its name implies, it operates in the highly stable medical sector, letting out properties that are always in high demand, like GP surgeries and diagnostic centres.

Like many other REITs, it also has tenants tied down on long-term contracts. The weighted average unexpired lease term (WAULT) here was 9.1 years as of June, providing excellent earnings visibility. What’s more, almost 90% of its rent roll is funded by government bodies.

Primary Health could be vulnerable to an inflation spike that drives up interest rates. But I think its other defensive qualities make it worthy of serious attention (I own the company in my own portfolio).

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

The food producer

We all need to eat, whatever crisis comes along, economic or otherwise. And so food producers and retailers can be excellent lifeboats in tough times.

One from the FTSE 250 that appeals to me is Premier Foods (LSE:PFD). Many of the products it manufactures, like instant noodles, cooking sauces, and packet soups, are cheap to buy and prepare. This provides extra protection during economic downturns.

On top of this, Premier Foods owns some of the country’s most beloved brands like Bisto gravy, Mr Kipling cakes, and Batchelors soup. These provide revenues with added stability (it’s estimated that nine in 10 UK households have one of the company’s products in their cupboards).

Even though volatile cost prices are a long-term danger, I think it’s a top safe-haven share to consider.

A defence star

Defence industry shares such as Chemring (LSE:CHG) can also serve as effective buffers from stock market volatility. This is especially the case today, as European nations rapidly rebuild their armed forces due to fears over Russian and Chinese foreign policy.

This FTSE 250 business manufactures sensors, explosives, and countermeasures for defence forces worldwide. These include technologies that detect threats and protect combat aircraft. And it sells these to dozens of countries across Europe, North America, and Australasia, which helps to safeguards earnings from weakness in one or two regions.

The outlook for US spending is less clear, posing some uncertainty over Chemring’s future earnings. But I think strong demand from other NATO countries should more than offset this and drive growth.

The post 3 FTSE 250 shares that could survive a stock market crash! appeared first on The Motley Fool UK.

A critical aerospace supplier

Melrose has undergone an enormous transformation in the last few years, evolving from an acquisitive industrial engineering enterprise into an aerospace pureplay. In 2025, this transition’s in the final stages of completion, with a lot of accounting quirks that make it difficult to figure out what’s actually going on under the surface.

However, when stripping out temporary expenses and digging down to underlying earnings, we uncover a highly profitable, highly cash-generative business, trading at a price-to-earnings ratio of just 12. For reference, the industry average is closer to 30.

Right now, management’s targeting some impressive financial goals. If everything goes according to plan, revenue could reach £5bn by 2029 versus the £3.5bn achieved in 2024. At the same time, operating profits are expected to follow to £1.2bn at a 24% margin (more than double the industry average) with free cash flow growing to £600m.

Even when discounting these milestones with a healthy pinch of scepticism, Melrose continues to look like a dirt cheap stock. That’s why I’ve already added the business to my portfolio. However, I’m not blind to the risks.

As a top-tier supplier to companies such as Airbus and Boeing, growth and demand are highly sensitive to its customers’ build rates – something out of management’s control. Supply chain disruptions have also created several headwinds of late, which may only get worse if uncertainty in the geopolitical and macroeconomic landscape continues to rise. Investors will have to carefully consider both of these threats.

Another transformation opportunity

Melrose isn’t the only business undergoing surgery. Under new leadership, Premier Foods leveraged the surge in home cooking during the pandemic to mend the long-standing debt and pension problems on its balance sheet. Five years into this turnaround strategy and the financial position’s drastically improved.

Net debt’s dropped from 2.9 times EBITDA to just 0.7, free cash flow has doubled, operating margins are now the highest among its rivals, and growth’s been restored. Yet despite this progress, the shares still trade at a price-to-earnings ratio of 13.6. By comparison, its top competitor, Unilever, has weaker margins yet is sitting comfortably at 22.4.

In other words, Premier Foods’ impressive turnaround seems to have flown under the radar of most investors. Although, to be fair, the risks surrounding the business could also help explain the weaker valuation.

Management’s begun expanding into international markets with its flagship brands like Mr Kipling. While that opens the door to more growth, it also introduces foreign currency exchange risk and, more importantly, execution risk. International expansion’s an expensive endeavour that could distract management from its crucial core UK market, creating opportunities for rivals to steal market share.

However, these risks may be worth taking, considering how cheap the stock appears to be today. That’s why I think investors may want to mull over this opportunity as well.

The post 2 still-cheap stocks to consider as UK shares reach record highs! appeared first on The Motley Fool UK.

Right now, the full UK State Pension is just shy of £12,000 a year. So with that in mind, let’s explore three simple strategies to aim for twice as much.

Three simple tactics

If the goal is to earn £24,000 a year, then following the 4% rule indicates an investor needs to build a £600,000 portfolio. That’s not a trivial sum. But by leveraging the compounding returns of the stock market, it’s an achievable goal in the long run.

However, investing in stocks isn’t risk-free. Buying shares is a serious endeavour that requires patience and discipline. Yet, there are some basic steps investors can take to avoid horrendous mistakes and achieve their passive income goals.

1. Ignore the short-term noise and focus on playing the long game.
2. Diversify across multiple businesses from a variety of industries.
3. Stay consistent.

Number one is arguably the hardest, given how easy it is to panic when the market throws a tantrum. But the evidence is clear, holding through the storm and capitalising on bargains leads to significantly better outcomes. Number two is the most tried-and-tested way of keeping risk in check, while tactic number three is what enables compounding to deliver jaw-dropping results.

By systematically drip feeding £500 each month into a low-cost FTSE 100 index fund at an admittedly-not-guaranteed 8% average annual return, a £600,000 portfolio could turn from a dream into reality in 28 years.

Accelerated wealth

For those willing to take on more responsibility, picking quality stocks directly can drastically shorten the timeline to earning twice the current UK State Pension.

For example, in the last decade, Premier Foods (LSE:PFD) has been enriching many shareholders, delivering a 17.9% annualised return since 2015, enough to cut down the waiting time by over a decade. How? By leveraging an iconic brand portfolio of consumer products, taking market share from competitors, and establishing pricing power.

Today, brands such as Mr Kipling, Sharwood’s, Ambrosia, and Bisto can be found in almost every supermarket. And when combining this steady expansion with a continuous strive for operational efficiency, the result is a highly profitable and cash-generative food business.

The firm continues to excel, delivering a 21% gain over the last 12 months. But even high-quality businesses have their weak spots. With its products already in so many stores, sales volumes have started to slow, making it increasingly reliant on its pricing power to supply growth.

So far, that hasn’t been a problem. But prices can only be hiked by so much. In other words, there are limits to this growth strategy. That’s why developing or acquiring new products and brands will undoubtedly be crucial for long-term success. But that also introduces the risk of poor execution.

To date, these headwinds haven’t stopped Premier Foods from excelling. And with an impressive track record, that makes it a firm worth investigating further, in my opinion.

The post 3 passive income strategies I like to try to double the State Pension with just £100 a month appeared first on The Motley Fool UK.

Investors have reaped a total return of 42.1% in the last half-decade – a compounded average rate of just 7.3% a year. At this slower rate, anyone who invested £10,000 back in June 2020 is now sitting on £14,210.

That’s certainly nothing to scoff at. But over the same period, the FTSE 100 was up by 73.8%, or 11.7% a year. That means the same £10,000 investment would now be worth closer to £17,380.

What’s behind this underperformance, and what does the future hold?

FTSE 250 vs FTSE 100

There are a lot of complex factors at play when analysing the performance of the largest 100 companies against the largest 101st to 350th businesses. But one of the biggest reasons driving the relative underperformance of small- and mid-cap stocks is their increased sensitivity to domestic economic conditions.

It’s no secret that the UK economy hasn’t exactly been a stellar performer since the pandemic. A combination of rising living costs, Brexit-related uncertainty, and low growth hasn’t created an optimum environment for smaller businesses to thrive. 

However today, the situation seems to be steadily improving. Inflation’s slowly falling along with interest rates, while GDP grew meaningfully by 0.7% in the first quarter of 2025. So could this spark some new optimism among investors?

Some institutional analysts certainly seem to think so. Several have commented on the seemingly large valuation gap between the UK’s two flagship indices. And if economic growth can be sustained, a stronger appetite for cyclical value stocks could steer the index back into growth mode.

Looking at winners

While the index as a whole has been a bit disappointing, the same can’t be said for some of its constituents. For example, Premier Foods (LSE:PFD) has been on a pretty phenomenal run over the last five years, climbing by almost 290%. And when accounting for the extra gains from dividends, anyone who bought £10,000 worth of shares back in June 2020 now has a whopping £39,820!

It seems despite the economic pressures, households are still willing to pay up for the company’s premium brands, such as Paxo, Bisto, Mr Kipling, and Sharwood’s, among others. And with management divesting its lower-margin non-core assets to focus on its top performers, revenue, profits, cash flow, and dividends have all been on an upward trajectory – a trend that analysts anticipate will continue moving forward.

However, that doesn’t mean this FTSE 250 is a guaranteed winner. Being a food producer, Premier Foods is highly sensitive to external input costs for both raw ingredients as well as energy. At the same time, consumer tastes are constantly shifting. And with many becoming increasingly health conscious, the firm’s brand relevance could suffer if management isn’t able to innovate.

Nevertheless, given the company’s impressive track record, Premiere Foods is worth closer inspection, in my opinion.

The post Want to invest £10,000 in the FTSE 250? Here’s how much money investors have made in five years appeared first on The Motley Fool UK.

The Premier Foods (LSE:PFD) share price has gone from 45p in 2020 to over £2 today. And there’s an important lesson for investors in this.

What’s happened?

Premier Foods isn’t a particularly dynamic business. It manufactures a range of branded and own-label packaged foods, ranging from cakes to cooking sauces.

It’s the type of company where returns tend to be steady, rather than spectacular. But over the last five years, both the business and the stock have done incredibly well.

Sales have increased, margins have widened, and the company has reinstated its dividend. And this has caused the share price to rise sharply. 

One of the key improvements has been the firm’s balance sheet. Since 2020, long-term debt has decreased from £501m to £326m, resulting in lower interest payments and higher profits.

This, however, looks unlikely to continue. The company is now in a strong financial position, so I’m wary of how much scope there is for future improvements on this front.

As a result, I’m looking around for the next major opportunity. And there’s a stock that’s been catching my eye recently as one to take a closer look at. 

The next big thing?

Rentokil Initial (LSE:RTO) has a lot in common with Premier Foods. It operates in an industry where demand is relatively stable and it has a significant competitive position.

Like Premier Foods in 2020, Rentokil also has a lot of debt on its balance sheet. Long-term borrowings are roughly double where they were five years ago. 

This, however, is the result of a big acquisition in 2022. And I think as the debt level decreases and interest payments fall, there’s a decent chance of profits moving higher.

Earlier this week, though, the company hit a setback as CEO Andy Ransom announced his intention to retire in 2026. With the firm still in transition, a change in leadership is a risk.

Despite this, I think there’s clear scope for the company to keep moving forward. Signs of operational efficiencies are starting to appear and the debt level is starting to decrease.

I’m therefore optimistic that this might be a similar story to Premier Foods from five years ago. I’m not saying a 300% return is on the cards, but the two seem to have a lot in common.

Foolish takeaway

Rentokil’s recent results have been somewhat underwhelming. The integration of its big acquisition has taken longer than a lot of shareholders were expecting. 

I think, however, there are clear reasons for optimism. And I’m struck by the similarities between the company right now and Premier Foods when I first saw it in 2020. 

I missed out on the FTSE 250 stock back then because I was concerned about its debt levels. But I’m determined not to make the same mistake again.

The post This FTSE 250 stock has returned over 300% since 2020 appeared first on The Motley Fool UK.