Associated British Foods (ABF): A Quiet Giant Worth Watching
ABF reports on 29 April 2025, which I’ll be watching closely. It’s been on my radar for a while, but the recent strong move in the share price caught my eye. ABF is a rare, quietly diversified business that keeps pushing through the cycles without much fuss.
Leadership Shifts
There’s been a bit of turbulence lately. In March, Paul Marchant, CEO of Primark, stepped down following an internal investigation into inappropriate behaviour towards a female staff member. A serious issue, and the company acted quickly. Eoin Tonge, formerly Group Finance Director, has stepped in as interim CEO.
A Diversified Beast
Let’s break this down. ABF is wonderfully diversified across five key segments:
(~40% of Group Revenue)
The crown jewel. Primark keeps growing in key markets, but U.S. tariffs from Trump’s “Liberation Day” trade push could squeeze margins on imports. I haven’t been able to pinpoint precisely how much revenue comes from the U.S., but given ABF’s diversity, I don’t think it’s a significant risk. Still worth watching if the U.S. becomes a bigger growth engine.
Demand looks solid, and the post-pandemic recovery has been impressive. Primark doesn’t do e-commerce, which saves cost but limits reach—a bit of a double-edged sword.
Grocery (~20%) – Branded Power
This is a kitchen cupboard hall of fame: Twinings, Ovaltine, Kingsmill, Jordans, Ryvita, Patak’s, and Blue Dragon.
This segment took a hit during the cost-of-living crunch as consumers traded down to supermarket own labels. But that trend is easing. Branded goods are staging a comeback with input costs stabilising and consumer confidence picking up. ABF is well-placed to ride that shift—especially in niche, premium categories where they’ve got pricing power.
Sugar (~15%) – The Cyclical Wildcard
This one’s volatile. Prices are under pressure in Europe, so sugar might be a drag this quarter. But that’s the nature of commodities. Not a dealbreaker, just something that could cap near-term gains.
Agriculture (~15%) – Steady B2B
AB Agri provides feed, agri-tech, and nutrition products. Not flashy, but dependable. Consumer moods don’t sway demand here—this segment acts like an anchor during rougher seas.
Ingredients (~10%) – Under-the-Radar Winner
This is the sleeper hit. ABF sells yeast, enzymes, bakery ingredients, and proteins to the food and pharma industries. It’s B2B, high-margin, and sticky thanks to innovation and strong relationships.
Why I Like It
What makes ABF interesting is that when one part of the business struggles, another part often picks up the slack. It’s a classic diversification story:
- Sugar weak? Groceries strong.
- Primark facing tariffs? Ingredients and Agri hold the fort.
Valuation & Outlook
Right now, ABF looks fairly valued. The P/E ratio is reasonable, cash flow is solid, and there’s no scary debt load. If consumer confidence keeps ticking up and those U.S. tariff risks don’t escalate, this stock could quietly grind higher.
- Market Cap: £15.8bn
- Share Price: £21.90
- EPS (Sept 2024): £1.94
- MY Average Estimated EPS for the next few years of £2.02
- Average P/E since COVID: ~23x
- Target Price: 2.02 × 23 = £46.40
That’s a potential doubling from here if things keep going the way they are and a bit of positivity comes to the market.
During euphoric times when consumers are happy, rates are low, and we are all happily skipping into town, the PE can achieve a high of 50+. I won’t hold my breath for anything like that yet, but who knows?
Watchlist or Buy List? Let’s see what the 29 April update brings. I’ll be watching consumer sentiment closely—through data (like Trading Economics) and real-world signs: footfall, shopping bags, and whether people are smiling in the stores.
If the vibe is strong, I might just move ABF from the watchlist to the buy list.
I dig a little further into reports before analysing other fundamentals; we’re just getting some ideas here. Please do your own research before pressing the buy button.
I’m Trading the US Markets.
As we’ve discussed before, this volatile environment continues to offer plenty of opportunities to ride the trend, but with that volatility comes the risk of sharp, sudden moves in both directions.
Yesterday, I was trading on a small time frame, a 5-minute chart, when a piece of economic data hit the tape: a bond auction in the US. The price of the NASDAQ and other indices dropped sharply, hitting my stop before bouncing right back up. Classic whipsaw.
During periods like this, we need to keep a close eye on everything: all economic data releases, all Trump tweets, and all market-moving headlines. One line of text can shift the market fast.
As I trade, I’m watching the data come in — specifically the initial jobless claims. Here’s what I’m seeing:
Jobless Claims Data (Just Released):
- Initial jobless claims rose slightly to 222,000.
- This was in line with expectations and still close to a two-month low. No surprise = no panic.
- Continuing claims (outstanding claims) fell by 37,000 to 1.841 million.
- That’s way better than the expected rise to 1.88 million.
- Federal employee claims (DOGE-related firings) only rose by 87, totalling 629.
- These are low numbers, and many of those fired aren’t yet eligible for benefits due to severance packages.
Why Is the Market Rising on This?
This data supports the “soft landing” narrative. It’s a Goldilocks-style print that is not too hot or too cold.
- Not too hot:
- A small rise in initial claims shows the job market isn’t overheating. That means less pressure on the Fed to hike again.
- Not too cold:
- The drop in continuing claims suggests people are finding new jobs relatively quickly. The labour market is still strong.
- Stable but softening economy:
- This is the exact combo the Fed wants to see if they will cut rates later this year, signs of resilience without runaway inflation.
Could This Be a Sign the Fed Will Cut Rates?
Yes and that’s why the market is up.
- A gradual loosening in the labour market is what the Fed needs to justify a pivot.
- The fact that continuing claims are dropping shows no hard landing risk.
- Pair that with more incredible inflation numbers recently, and rate cuts in late 2025 are back on the table in traders’ minds.
Bottom line: The market is now pricing in a greater chance of a Fed cut, or at the very least, no more hikes. Equities love that.
Just a snapshot of how I navigate my day. I’m not an economist, but by reading the news, I learn a little more each day, which certainly helps drive my gains higher. I still promote simplicity, so don’t get too bogged down; having a good idea of what’s happening worldwide is sufficient.
They Cant Leave Them Alone
Market Psychology & FOMO — The Palantir Setup
Palantir’s had a sharp pullback, but here’s the key: the crowd hasn’t given up. You can still feel the bullish energy bubbling under the surface.
Even after the drop, traders and investors are still interested. Why?
- Traders Averaging Down
Many retail traders who bought during the hype don’t want to sell at a loss.
So they average down, convincing themselves they’re “buying the dip” but really, they’re trying to fix a bad entry with another one.
FOMO isn’t just about missing gains. It’s also about not wanting to miss being “right” on a stock they emotionally backed.
- Latecomers Who Thought It Was Too Expensive Before
These people sat on the side-lines when PLTR was at $25+ thinking, “This is overvalued.”
Now, with a slight pullback, they’re itching to get in not necessarily because the fundamentals are better, but because:
“What if it rips again and I miss it twice?”
That’s classic FOMO. They’re emotionally anchored to the price they saw it skyrocket to and are now justifying the dip as “cheap” even if it still looks expensive on traditional metrics.
- PLTR Still Looks Expensive — But That Doesn’t Always Matter
- Yes, it might still be richly valued based on forward earnings or cash flow.
- But narrative stocks like PLTR don’t trade on traditional fundamentals alone they trade on story, hype, and AI dreams.
- Traders justify chasing it because they believe the market will reward the potential, not the present.
So even if it’s expensive, FOMO overrides logic. It becomes:
“If it went to $45 once, it can again, and I won’t miss it this time.”
4. Emotional Anchoring + Loss Aversion = Dangerous Mix
You’ve got people:
- Averaging down to justify earlier losses.
- Buying in now to avoid missing a future rally.
- Ignoring valuation because of emotional anchoring to past highs.
This all makes PLTR a crowded, emotionally charged trade. That doesn’t mean it’s a bad trade, it means it’s psychologically loaded.
So My Final Thought:
When sentiment is this emotionally driven, price action matters more than valuation in the short term.
If Palantir starts climbing again, the FOMO crowd could easily pile in and create a fresh wave of momentum, even if fundamentals don’t support it.
But if it drifts lower or stagnates, many emotional buyers may panic and rush for the exit. That’s when FOMO flips to regret, and those are the sharp unwinds.
As a trend trader, I am constantly analysing the crowd to predict their next moves. With a stock like PLTR, I ride the waves but always assess my risk, adjusting my stop-loss to break even when necessary. Let’s discuss stop-loss strategies next time.
Goodbye for now; I need to take the kids to the barber after an excellent trading day!
