Whole Foods Market, Inc. (WFM), The Fresh Market Inc (TFM): A Price Cut You Don’t Want to Miss

Growing sales and stores

There were a lot of great pieces of information to come out of the earnings report two weeks ago. Sales increased 14% as the company opened 10 new stores – more than any other quarter. While same store sales were down, compared to the previous four quarters, 7.2% is still one of the best numbers in the industry.

Even rapidly growing specialty grocer The Fresh Market Inc (NASDAQ:TFM) usually sees comparable sales growth lower than Whole Foods’, and also saw a downtick in its latest quarterly report to 5.6%. The slowdown in comparable sales and a disappointing forecast led to a similar sell-off of The Fresh Market’s stock. However, whereas analysts expect The Fresh Market Inc (NASDAQ:TFM)’s same store sales to grow at just 0%-4% rate when it reports next, Whole Foods is still expected to come in with a growth rate of 6.6%-8% for this quarter.

What’s more, Whole Foods is growing its store count at a faster pace than ever before on an absolute basis. It currently has 85 stores in development, and plans to expand its store count from 345 to 1000. The growing store count will continue to supplement the fantastic same store growth.

A long-term investment

While Whole Foods trades at a high P/E ratio compared to its peers, I believe that its price is completely justified by the excellent growth prospects the company presents. However, investors should note that like most high P/E stocks, even the slightest bit of bad news can cause the stock to tumble. That’s the time when long-term investors, who understand the company’s growth strategy, can buy shares at a discount. That time is now for those considering Whole Foods.

The article A Price Cut You Don’t Want to Miss originally appeared on Fool.com and is written by Adam Levy.

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