Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Whole Foods Has the Right Stuff

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

The economic climate may be rotten for grocery stocks in general, but Whole Foods Market (Nasdaq: WFMI  ) just proved that it's still made of the good stuff.

Whole Foods' first-quarter earnings increased 78.5%, to $88.7 million, or $0.51 per share. Sales increased 14%, to $3.0 billion, and comparable-store sales increased 9.1%.

Management apparently considers Whole Foods' reheated sales growth sustainable, since it boosted its guidance for the rest of the year. The company now expects a 10.7% to 12.8% increase in sales in fiscal 2011, and a 23% to 26% increase in earnings per share.

Whole Foods' tantalizing quarter reinforces fellow Fool Dayana Yochim's and my endorsement of Whole Foods as a solid pick last November. This is a smart contender in a difficult retail sector, as its continued financial performance proves.

Meanwhile, Wal-Mart (NYSE: WMT  ) struggles to increase its U.S. sales, and times are tough for grocery rivals like SUPERVALU (NYSE: SVU  ) , Kroger (NYSE: KR  ) , and Safeway (NYSE: SWY  ) . While recent skyrocketing commodity inflation is a concern for all the names mentioned above, Whole Foods will likely be the most resilient, since its core clientele tends to be more affluent.

Conventional grocers likely won't be able to pass rising food costs along as readily, and their margins could suffer as a result. After all, there's a point at which financially strapped shoppers either won't or simply can't pay higher prices.

Whole Foods certainly looks like an expensive stock among its supermarket rivals; it trades at 35 times forward earnings, compared to a forward price-to-earnings ratio of 13 for Safeway and 12 for Kroger.

Still, as weaker rivals like SUPERVALU circle the drain, Whole Foods stands out as the grocer with the most enticing potential growth ahead. Whole Foods has only about 300 stores right now, so it has plenty of room for growth. Furthermore, it continually comes up with new initiatives to keep its customers engaged, and it's on top of many increasing trends, including the pursuit of healthy diets. Even now, Whole Foods' stock is worth the price.

Whole Foods is a Motley Fool Stock Advisor recommendation. Wal-Mart is a pick of Motley Fool Inside Value and Motley Fool Global Gains. Motley Fool Options has recommended buying calls on SUPERVALU. The Fool owns shares of SUPERVALU, and Wal-Mart. Try any of our Foolish newsletter services free for 30 days.

Alyce Lomax owns shares of Whole Foods Market. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (1) | Recommend This Article (9)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 10, 2011, at 7:02 PM, Undifelice wrote:

    Great! Now Whole Foods is only $6 under where Ms. Lomax suggested this as a "Mother's Day" pick about 5 years ago. I followed her suggestion and really screwed up my mom's life when the stock tanked.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1439483, ~/Articles/ArticleHandler.aspx, 11/30/2015 9:09:18 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Alyce Lomax

Alyce Lomax is a columnist for specializing in environmental, social, and governance (ESG) issues and an analyst for Motley Fool One. From October 2010 through June 2015, she managed the real-money Prosocial Portfolio, which integrated socially responsible investing factors into stock analysis.

Today's Market

updated Moments ago Sponsored by:
DOW 17,719.92 -78.57 -0.44%
S&P 500 2,080.41 -9.70 -0.46%
NASD 5,108.67 -18.86 -0.37%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

11/30/2015 4:00 PM
KR $37.66 Down -0.35 -0.92%
The Kroger Co. CAPS Rating: ****
SVU $6.72 Down -0.31 -4.41%
Supervalu CAPS Rating: **
SWY $0.00 Down +0.00 +0.00%
Safeway, Inc. CAPS Rating: **
WFM $29.15 Down -0.26 -0.88%
Whole Foods Market CAPS Rating: ****
WMT $58.84 Down -1.05 -1.75%
Wal-Mart Stores CAPS Rating: ***