Investors should consider a piece of Greggs’ pie in 2011

Nick Raynor, investment adviser at The Share Centre explains why investors should consider Greggs as 2011 looks promising.

"Despite shutting 62 stores during the snow blizzards, Greggs reported an increase in turnover of 3.5% for the Christmas trading period - a pleasant surprise as other high street retailers were badly affected by the weather.

"Mince pies were a large factor behind the increase as sales rose by 19%, another strong seller was coffee, with sales increasing significantly by 26%.

"We like Greggs for its continued growth and strong yield in a tough economic environment. Figures for 2011 are due to be in-line with expectations and the company is looking forward to opening a further 80 stores, creating 700 jobs. The yield of 3.3% could be attractive for income investors.

"This is a high risk stock and concerns have recently been raised that higher wheat prices could and probably will affect the bottom line. However, we feel Greggs will get over this short-term problem and recommend investors take a bite."