Food and drink firms toast shares gains
The sector comfortably outperformed most of its international peers in the process, but a report published yesterday suggests slower progress is in prospect going forward.
This time last year IAWS plc was highlighted as the best publicly-quoted food stock over the past 10 years across the globe.
And despite a bad year on the agri trading side, Liam Igoe of Goodbody Stockbrokers, who has compiled a new report on the sector, still has IAWS top of his list for the next year along with C&C. IAWS will achieve earnings growth of 13% this year, driven by its par baked breads and finger food options for the consumer, he said.
IAWS has retained a buy recommendation from Mr Igoe, who believes strong double digit growth is still on the cards for the group for some time. He warns however that “we would be somewhat more cautious going forward” given that ratings are on a par with international counterparts at this juncture.
His key stock picks are IAWS and C&C, notwithstanding the fact that in both cases their leading shareholders have been sellers of the stock, he said.
All other four stocks are rated “Add”, with Kerry Group holding out the best longer-term prospects, said Mr Igoe. One of the difficulties for Kerry is that near-term reasonably-priced acquisition opportunities appear to be scarcer than before.
Elsewhere he believes Glanbia, Greencore and Fyffes will make gains but slower than the two top choices.
IAWS is enjoying very strong organic growth in its core food operations, with annual rates varying from 5%-20%. Agri-business will account for less than 15% of earnings going forward and the group has a strong balance sheet. The share price target has been raised from €13 to €14 for the year, he said.
C&C is also retained as a “buy” and its share price target raised from 375c to 450c.
In the case of Greencore, the broker believes the company has done well out of Hazlewood, its British convenience food and sandwich group.
