Follow the acquisition of £111,250 worth of Thorntons (THT) by chairman Paul Wilkinson. His trade, as well as those struck by fellow directors, suggest the chocolatier's recovery is secure, market share gains on the way and growth prospects are good.

Last week (11 Sept), Wilkinson raised his stake in the Derbyshire-based chocolate manufacturer and retailer to 2%. Chief executive officer Jonathan Hart, the key figure in the food manufacturer's turnaround, joined the spree as he invested £46,940 to lift his interest to 0.3%. Non-executive director Martin George also tucked in.

Thornton's sour history of profit warnings meant Shares had remained sceptical. We now suspect further forecast upgrades are coming and improved growth, as well as lower risks and better quality of cashflow, could take the shares higher. The £60.8 million cap earned another round of upwards forecast revisions following last week's (11 Sept) finals, which showed dramatic improvement in pre-exceptional taxable profits from £900,000 to a better-than-expected £5.6 million.

Under Hart, Thorntons is shifting its sales mix toward its growing fast moving consumer goods division, revitalising its brand with new products for year-round chocolate gifting and reducing owned stores to a profitable portfolio of between 180 and 200 sites. Consumer confidence is on the rise and Thorntons plans exciting new affordable treats for the Christmas selling season. Financial risk is also reducing as cashflow improves, with net debt pared by £1.6 million to a year-end £27.5 million.

For June 2014, Investec Securities' Nicola Mallard looks for £7.2 million profits and 27% earnings growth to 7.6p. Those estimates place Thorntons on a prospective price/earnings (PE) ratio of 11.8, which looks undemanding. The broker's 112p price target implies tasty 25% upside.

Hart's strategy is paying off and the shares should have further to travel at 90p.

THE TRADE

Buyer:

Paul Wilkinson, Chairman

Consideration:

£111,250

Number of shares bought:

125,000

Subsequent holding:

1,325,503 (2.0%)