Markets remain in recovery mode and Greggs upbeat despite February setback

“A second day of gains on the FTSE 100 provided welcome relief to investors, although the rebound only makes up a small fraction of the losses experienced last week.

“In-demand stocks in the broader FTSE 350 index included Aston Martin, insurer Direct Line and promotional products specialist 4imprint.

“Importantly, stock movements were also influenced by company-specific news, suggesting a sense of normality is creeping back into the markets. For example, power provider Aggreko jumped 8.1% on its full year results and precious metals miner Fresnillo retreated 4% on disappointing profit figures and guidance for costs to remain high this year.

“The UK stock market rally followed a very impressive turn on Wall Street last night where the S&P 500 jumped 4.6% and the Dow Jones rallied by 5.1%.

“These gains will be important in helping to rebuild investor confidence,” says Russ Mould, Investment Director at AJ Bell.

Greggs

“King of the sausage roll, Greggs has done it again with yet another stellar performance. The fact it managed to grow like-for-like sales by 7.5% in the nine weeks to 29 February is superb when you consider the second part of that period saw a significant slowdown in sales growth.

“It implies that sales growth was tremendous at the start of 2020, which is all the more impressive when you consider that the same period a year earlier was also very strong.

“Greggs puts its success down to customer loyalty and a positive culture in the business whereby staff are eager to provide a good service to the people buying food and drink in its stores.

“Everyone is sharing the rewards. It seems like Greggs staff enjoy working for the business and they all received a £300 bonus at the start of this year. Customers are coming back for more, so they obviously like the products. And shareholders have been treated to some impressive share price gains in recent years as well as generous dividends.

“Future sales growth will be helped by having a multi-channel service including home delivery. However, it also flags an intention to have more fully-seated shops as it says average sales from these formats are significantly ahead of the group average.

“Now looks like an ideal time to take advantage of falling costs in the retail space and relocate to more favourable locations for this format.”

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