Gamble of the week: British sausage maker

This maker of British sausages and pork products has been hit by the rise in grain costs. But with the Olympics next year - and sizzling barbecues - the oulook for this stock is positive, says Paul Hill.

In late July shares in Cranswick were toasted after the fresh pork, bacon and sausage maker warned that rising input costs would hit profits. Pig meat prices after sliding to historically low levels in 2010 have risen by 15% since March as feedstock (mostly in the form of wheat and soya-based grains) has rocketed in price.

Cranswick has sensibly chosen not to raise prices all in one go. This would have been commercial suicide, and risked putting hard-pressed families off its produce. Instead, the board decided to phase in price rises, initially absorbing 40% of the added costs themselves. Consequently, first-half operating profits are expected to be down on last year and "there is little prospect of any improvement" for the second half.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Paul gained a degree in electrical engineering and went on to qualify as a chartered management accountant. He has extensive corporate finance and investment experience and is a member of the Securities Institute.

Over the past 16 years Paul has held top-level financial management and M&A roles for blue-chip companies such as O2, GKN and Unilever. He is now director of his own capital investment and consultancy firm, PMH Capital Limited.

Paul is an expert at analysing companies in new, fast-growing markets, and is an extremely shrewd stock-picker.