Whole Foods is Whole Again
Blogging is a tough act. It is something I do in between my day job, managing portfolios and spending time with family. So there are many times when I do my research on a stock and buy it for a client’s portfolio or my own, but don’t get a chance to blog about it till much later. By then the stock has made part or most of its move and I am caught recommending a stock at the wrong price. But what the heck – here goes.
I was telling my co-author Muizz on Aug 11 (Friday), that Whole Foods (WFMI) looks like a good buy. Did I foresee the future? Not exactly. I just read about it during the week, and had been looking at it going down all week. Barron’s ran a bullish story on WFMI that weekend (pure co-incidence) and it reaffirmed my stance that the stock was done going down. I pulled the trigger first thing on Monday morning at $49.70 when the stock opened up $1.50 above the closing price on Friday evening. Since that day, I have wanted to write to all you readers about this stock. Today the stock sits pretty, about 6 points higher than where I bought it at above $54.50 – but I am somewhat of a maverick – so I will put my neck on the line and recommend it even here.
WFMI is currently 32% off its 52-week high and is the supermarket for organic foods. It operates 183 stores nationwide, in a niche market that outpaced the broader food market last year. The company does 15% of its business through private labels and plans to increase investments in private labels to help increase margins.
Those who have shopped at Whole Foods know that the experience alone is what attracts most shoppers. With their unique offerings, food tasting and selection, customers who shop there tend to stick with the chain.
Whole Foods currently has almost no debt, with annual earnings growth at over 30% and a P/E ratio at levels not seen since 2003. At these levels, despite the recent 15% move, I recommend a buy on Whole Foods.
– Faisal Laljee
WFMI has made a nice bounce,
after July selloff.
while others in the group
still waiting. CMG. SBUX.
Laljee,
That piece of yours on WFMI is so full-o-shit, and you know it!
Sounds like you bought on an impulse, and now you are PANICKING/pumping.
The stock has an unsustainable P/E — it will be further cut in half — GUARANTEED. Just a matter of time.
The sector (”organic food”. . .or is it “overpriced food”?) is getting overcrowded. . .with the likes of WMT and SVU, and a host of others getting getting into the act. Margins will be under severe pressure as the competition intensifies.
Then ofcourse, there is the whole separate issue of a slowing economy. . .and what that does to the high P/E stuff.
Bail out quick, Laljee. . .we all make mistakes from time to time. Take your windfall profit and be gone.
The stock has had its day in the sun. . .like yesterday!
strickly_no_bull_here.
ignore the garbage post and
keep trying.
Anonymous – we will just have to agree to disagree. I am already up 10% on this stock in 2 weeks. Also, keep in mind that valuation is not everything. Organic food shoppers are usually higher income folks who like a little pampering, who value status and like a good presentation. They would not be caught dead in SuperValue or Walmart. Also, the organic food market has plenty of room for all these players. A bigger threat than Walmart and SVU are Safeway and other grocers (Ralphs in CA, HEB in Texas) that are starting to carry organic offerings.
WFMI- this is a nice 10% bounce
in a nasdaq 6 day
72 point index rally that might
tip over on profit taking
for atleast 2 days if not more.
dont take the easy bounce
profit for granted. might
become minimized in index
selloff.