Whole Foods: A natural breakout?
The organic grocer is fundamentally strong and the stock is technically poised for an upside move.
With annual revenues of $11.1 billion, Whole Foods Market (WFM) owns and operates the country's largest chain of natural food supermarkets.
It is like a neighborhood grocery store, an organic farmer's market, a European bakery, a New York deli, and a modern supermarket all rolled into one.
WFM is poised to show strong earnings for the upcoming third quarter and we see the stock in a good spot to be accumulated.
Since setting a bear market low at $7.04, the stock has made a sensational recovery and is in a strong uptrend.
It peaked near $97 in June. The stock then put down a flat base that featured one shakeout to the downside. The stock bounced back quickly from the selling spree. It is poised to breakout to a new high. If it can do that it could draw in more buying.
Technically, the stock's momentum indicator is solidly bullish. In addition, its accumulation-distributions line is trending higher and has not shown much selling pressure.
This fiscal year ending in September, analysts are forecasting a 30% jump in WFM's earnings to $2.52 a share from $1.93 a year ago. Analysts have boosted their estimates.
The stock sells with a price-to-earnings ratio of 38. That is high given the earnings growth rate. So one needs to be watchful.
For fiscal 2013, ending in September, Wall Street projects a 15% rise in net to $2.90 a share from $2.52 anticipated for this year.
We suggest accumulation of a partial stake now with further buying to be done on a breakout over $97.60. We are then targeting WFM for a move to $115 off a breakout. A protective stop can be placed near $91.
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Too expensive for me for to shop there. Finding healthy food isn't the issue, having the money to shop there is. Eating fruits, vegetables and grains doesn't cost that much and I don't have to go there to find healthy food.
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Do it once a year. This allows the best-performing asset classes to take off and run.
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