Tip of the month

I tip Associated British Foods (ABF). The company provides a wide range of foods and also encompasses budget clothing chain Primark. It is profitable and there are also bid hopes. US giant Kraft could launch a bid over the next 12 months to provide it with a formidable bridgehead into the European market. Kraft's £10.2bn bid for Cadbury was rejected and a higher offer could still be refused.

ABF has held its own with growth coming from a number of astute acquisitions and store openings, along with robust organic growth.
Primark has seen a climb in sales, fuelled by new stores and like-for-like sales growth—all achieved despite the harsh trading climate. Latest sales are up seven per cent, which is an excellent performance.

Another growth point is the agriculture business AB Agri, which has seen a big rise in its operating profits.

Buy ABF at the current market share price, with a 20 per cent stop/loss to protect you against any major market fall backs.

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