Greggs PLC has emerged as one of the most talked-about stocks in the FTSE 250 after a period of sustained investor pessimism throughout late 2024 and much of 2025.
The bakery chain delivered a sharp share price spike last month following the release of its interim results, catching the attention of growth-focused investors across the UK market.
First-half sales climbed 7.2% to £1.1bn, while pre-tax profit jumped nearly 20% to £76m, beating expectations and signalling a meaningful operational recovery.
Operating profit came in even stronger, rising 22.9% to £86.5m, an impressive figure given subdued consumer confidence and unusually hot weather that is far from ideal for a pastry-heavy menu.
Shares jumped 12% on results day alone, as investors rapidly reassessed the bearish sentiment that had weighed on the stock for well over a year.
Cost discipline has been a key part of the story, with Greggs lowering its capital expenditure guidance by £20m to around £180m and swinging free cash flow from a £41m outflow to a £74m inflow.
After several years of heavy investment, this shift raises the prospect that shareholders are now moving closer to seeing the tangible financial rewards of that spending cycle.
Greggs finished the half with 2,773 shops open but still sees long-term potential for around 3,500 locations, with expansion increasingly targeting travel hubs, petrol stations, and retail parks rather than traditional high streets.
The company is also testing smaller Express formats and broadening its supermarket distribution footprint through partnerships with Tesco and Iceland, adding meaningful new revenue channels.
New product lines including iced drinks, salads, and the Chicken Roll have helped broaden its customer appeal, and its share of UK food-to-go visits has increased 0.3 percentage points to 8.7%.
The stock carries a price-to-earnings ratio of 15.38, which sits modestly above the FTSE 250 average but is not considered excessive if the company can sustain its profit recovery trajectory.
Greggs shares are up 16% over the past year but remain down 35% over the past five years, suggesting there could be considerable room for further recovery if momentum holds.
Risks remain on the table, including the possibility that continued hot weather into August could dampen demand for the chain’s core warm food products.
Wage inflation and ingredient cost pressures also remain live concerns, and there are genuine questions about whether reaching 3,500 stores would drive incremental growth or simply cannibalise existing locations.
“Yet on merit, I am seriously thinking about buying it for my portfolio. It’s hard for me to say for sure if it’s the best buy in the index right now, but it’s definitely up there. For investors who agree with my viewpoint, they could consider adding it.”
