Household names Greggs, Trainline and Admiral Group are among fund managers’ favourite UK stocks so far this year, according to expert stockpickers.
The shifting economic landscape has changed many things in the past year for investors. Most notably rate cuts from the Bank of England earlier this year have impacted some shares and boosted others.
Meanwhile, a new Labour government could be a boost to UK plc, with a stable government seemingly intent on driving foreign investment to domestic stocks.
Below, we have collected a sample of UK stocks which some managers have identified as their favourites for the year so far, either due to strong performances or future growth potential.
Greggs
Douglas Scott, co-manager of the five-crown rated £631m Aegon Global Equity Income fund, identified UK bakery chain Greggs as one of his favourite stocks of the year. Indeed, the FTSE 250 company has performed well, with an announcement from the firm in August noting that profits had risen by over £74m in the first half of the year alone.
In line with this, shares in the firm have become more desirable, with share price up by more than 20% from the beginning of the year, currently at £31.50.
Market Summary of Greggs YTD
Source: Google Finance
Scott said: “Greggs has successfully expanded its business model beyond traditional bakeries, offering food on the go, drive-thru services, extended opening hours, and partnerships with delivery platforms.”
For the team at Aegon, Greggs has distinguished itself for adapting to changing market demands such as by introducing new lines of products, all without sacrificing the core customer base.
Additionally, the firm is predicted to have solid growth potential, with the company having announced plans to open dozens of new bakeries following the rise in profits.
Cranswick
Next up is the UK farming and food production company Cranswick, best known for its brand of sausages, pork and bacon. This was a favourite holding of Richard Marwood, senior fund manager at Royal London Asset Management (RLAM), who is responsible for the £1.2bn Royal London UK Equity Income Fund, as well as the five-crown rated Royal London Global Income fund.
Marwood identified Cranswick based on the company's consistent 10-year performance, highlighting that the company, on average, has “grown its revenues, profits and dividend by more than 10% each year”.
Indeed, despite some hurdles this year, Cranswick has continued to maintain this strong performance, with its annual report for the 30th of March noting revenue had risen by almost 12%.
With a current stock price of £47.65, up 25% from the start of the year, the firm has been a successful investment for the RLAM team.
Market Summary of Cranswick YTD
Source: Google Finance
“As an investment, Cranswick has been excellent at growing its business by investing in its operations and producing good returns on those investments,” Marwood concluded.
Admiral Group
For James Harries, manager of the £294m STS Global Income and Growth Trust, financial services firm Admiral Group was one of his favourite stocks for the year.
The FTSE 100 company currently has a share price of £29.34 , which marks a relatively modest rise of 9.5% from the start of the year. While its UK focus means Admiral is one of the trust’s more niche holdings, Harries remained optimistic about the stock and described it as an “excellent, high-quality, income-generating asset”, which benefits from decently valued shares.
Market Summary of Admiral Group YTD
Source: Google Finance
Harries credited the firm for an excellent senior management team that uses data to direct the firm’s reinsurance strategy. This is particularly impressive for Harries, who described the insurance industry as “inevitably cyclical” and complex to manage.
Harries added: “The recent, quite violent Covid-disrupted cycle is a great case in point, which the company has managed brilliantly leading to very strong results.”
Trainline
Finally, Dmitry Solomakhin, portfolio manager of the Fidelity Active Strategy Global fund, highlighted the small-cap company Trainline, as his favourite stock of the year.
Primarily known for the online train ticket sales app, stocks in the company are currently valued at 303p, down by 3% since the beginning of the year.
Market Summary of Trainline YTD
Source: Google Finance
Despite poor recent results, Solomakhin said: “In my view, Trainline’s valuation today does not give it any credit.”
While Trainline is currently a niche technology in a heavily regulated industry, as ticket sales continue to move online, the stock has real growth potential, most notably in Europe.
Solomakhin predicted there would be increased demand for the firm’s ticket aggregate technology in markets such as Italy and Spain as they move away from legacy train carriers.
Indeed, according to the firm’s annual results, profits doubled in the past year to more than £56m, with sales in Spain and Italy accounting for more than 43% of the total growth last year.
Solomakhin said: “As soon as a certain train route opens to new competitors, Trainline – with its best-in-class technology – takes market share very quickly. I expect this trend to continue as train travel in Europe continues to be liberalised.”