Cake Box

“Shares in London-listed companies which generate the majority of their earnings from the UK have been given a small lift on the latest Brexit news. However, the 0.6% rise in the FTSE 250 index is by no means large enough to suggest that investors are hungry for UK equities once more after a long downbeat period. “The fact that EU leaders have agreed the UK’s exit deal ultimately isn’t enough to convince the market that Brexit will be conducted smoothly. Getting the deal approved by parliament is the real hard task, so UK equities are likely to remain volatile until the vote in mid-December. “The FTSE 100 managed a 1% rise on Monday driven by a rally in banks and insurers. Markets in other parts of Europe fared even better, such as a 1.3% rise in Germany’s DAX index. Sterling managed to nudge up 0.2% against the dollar to $1.2838 and it fell 0.1% against the euro at €1.1293,” says Russ Mould, Investment Director at AJ Bell.

Cake Box

“Cake selling franchise Cake Box packages up a great set of results which should help boost sentiment towards the stock after it briefly and unfairly took a knock thanks to negative read-across from the Patisserie Valerie accounting scandal.

“The only similarity between Patisserie and Cake Box is that they both sell cakes. The problems affecting the former look to be company-specific rather than sector-wide.

“Franchise businesses have been popular with investors in recent years as they allow companies to expand rapidly without employing lots of capital.

“The latest financial results from Cake Box suggest the company’s offering, selling eggless and fresh cream personalised celebration cakes which can be ordered and collected in an hour, is proving to be a winner with consumers.

“The number of franchise stores was up 15 to 101 in the six months to 30 September but like-for-like growth, stripping out the impact of new openings, was also healthy despite some hot weather in the period which one would assume is unhelpful in creating appetite for cakes. This underpinned earnings growth upwards of 30%.

“The next few weeks, encompassing Christmas and New Year, are likely to have a significant bearing on the full year results.”

These articles are for information purposes only and are not a personal recommendation or advice.