Gain to date: 5.9%

We are sticking with our bullish stance on value sausage rolls-to-sandwiches seller Greggs (GRG). Further earnings upgrades accompanied better-than-expected interims (30 Jul) which have increased our confidence in the bakery retailer’s self-help strategy.

Total sales grew 3.1% to £373 million and like-for-like sales rose 3.2%, admittedly against soft comparatives and with a good weather boost, sending pre-tax profits up 48.2% to £16.9 million. The bakery retailer also highlighted brisk July business and predicts more benign input cost inflation for the second half.

As explained in our original article - see Plays, 16 Jan - new CEO Roger Whiteside’s focus on ‘food-on-the-go’, as well as store refits and investment in staffing and product, are reinvigorating like-for-like sales. The supply chain is also being streamlined and the quality of Greggs estate is improving, with new shop openings targeted towards non-high street locations which enjoy better footfall.

N+1 Singer forecasts near-20% improvement in adjusted pre-tax profit and earnings to £49.3 million and 36.5p this year ahead of £51.3 million and 38.5p in 2015. Based on a 19.5p dividend, cash-generative Greggs offers an attractive prospective yield of 3.7%.

Greggs’ strategic initiatives are working and consumer confidence is improving. Given the growth momentum behind the group, further upgrades could be on the way, possibly as early as October’s third quarter update.