Tip of the Week

By Paul Hill, professional analyst & value investor
03/02/2012

The scarcity principle - that as assets dry up, prices rise - is key to investing. Take the mergers and acquisitions (M&A) arena, where German yoghurt and cheese maker Muller has forked out £280m for Robert Wiseman Dairies. Excluding Arla, which is probably off limits due to its complex ownership structure, there is now only one big milk producer up for grabs: and that's my tip of the week.

The attraction for buyers is that the industry is relatively stable and insulated from low-cost imports. Fresh milk and yogurt is produced locally due to its short shelf life, and Britain's distinctive cheeses and spreads obtain their rich flavours from the grass eaten by domestically reared cattle...

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