Coronavirus sent this high-quality grocer’s same store sales up more than 10%, providing a $0.24 earnings beat last quarter. Recently, seven analysts have raised their EPS targets for the company.
Sprouts Farmers Market, Inc. (SFM)
From FMA Trader Alert
It’s time for another new buy recommendation, and this one is all about high-quality food. No, not high-quality restaurant food. We still can’t really go to restaurants like we used to. Rather, we are talking high-quality, organic meats and foodstuffs of the sort sold at high-end boutique grocers.
Specifically, we are talking about the high-quality products sold at Sprouts Farmers Market, Inc.
Full disclosure, this is a store that Jim shops at frequently because it sells all of the pills, potions and organic foods that help fuel his workouts. But you don’t have to be a fitness freak to love SFM’s stock. In fact, all you have to do is be in love with the combination of the major earnings growth and strong buying in the shares.
On the earnings front, SFM has recently reported that sales across the chain rose at a brisk pace of 16% to $1.6 billion and that same-store sales spiked 10.6%. Adjusted earnings per share also surged 72% year over year. And Wall Street loves that organic growth (pun intended) as SFM shares are up some 29% year to date.
Pandemic or no pandemic, we suspect customers will continue to shop at Sprouts, and that means more upside in sales, earnings and in the share price, as the fast money continues a flight to high quality.
So, let’s buy Sprouts at market, with a protective stop set at $20.00.
For those willing to take a bigger bet, buy the SFM Sept. $30 call options (SFM200918C00030000) at market, which last traded for $0.80 and expire on Sept. 18.
Mark Skousen & Jim Woods, FMA Trader Alert, markskousen.com, Eagle Financial, 300 New Jersey Ave. NW, Suite 500, Washington, D.C. 20001, May 18, 2020