Is Sprouts Farmers Market (SFM) Trading in the “Range Of Reasonableness”?

Investment management company First Pacific Advisors recently released its “FPA Queens Road Small Cap Value Fund” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the second quarter, the fund returned 8.60% compared to a 4.97% return for the Russell 2000 Value Index. Moreover, the Fund returned 5.87% YTD, compared to -3.16% for the index. Additionally, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its second-quarter 2025 investor letter, FPA Queens Road Small Cap Value Fund highlighted stocks such as Sprouts Farmers Market, Inc. (NASDAQ:SFM). Sprouts Farmers Market, Inc. (NASDAQ:SFM) is a retailer of fresh, natural, and organic food products under the Sprouts brand. The one-month return of Sprouts Farmers Market, Inc. (NASDAQ:SFM) was -12.38%, and its shares gained 47.23% of their value over the last 52 weeks. On August 15, 2025, Sprouts Farmers Market, Inc. (NASDAQ:SFM) stock closed at $145.64 per share, with a market capitalization of $14.233 billion.

FPA Queens Road Small Cap Value Fund stated the following regarding Sprouts Farmers Market, Inc. (NASDAQ:SFM) in its second quarter 2025 investor letter:

“Sprouts Farmers Market, Inc. (NASDAQ:SFM) is a supermarket chain focusing on fresh, natural and organic products. The company has strong operating margins,13 attractive returns on capital and great new store economics. Sprouts accelerated its unit growth from 12 stores a year to 33 stores in 2024 on a base of roughly 400 stores. Over the past year, SFM’s stock has performed extremely well after reporting consistently strong operating results. We have been trimming our position since the third quarter of 2024 and Sprouts now sits outside of our top 10 by weight. Although SFM’s share price has increased faster than bottom line results, we believe SFM still trades in the “range of reasonableness” for a high-quality, non-cyclical franchise that can reinvest capital at attractive rates of return.”

Was Jim Cramer Right About Sprouts Farmers Market, Inc. (SFM)?

A bright, colorful display of fresh produce in a grocery store.

Sprouts Farmers Market, Inc. (NASDAQ:SFM) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 50 hedge fund portfolios held Sprouts Farmers Market, Inc. (NASDAQ:SFM) at the end of the first quarter, which was 47 in the previous quarter. Sprouts Farmers Market, Inc.’s (NASDAQ:SFM) sales rose 17% to $2.2 billion, in Q2 2025.While we acknowledge the risk and potential of Sprouts Farmers Market, Inc. (NASDAQ:SFM) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Sprouts Farmers Market, Inc. (NASDAQ:SFM) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered Sprouts Farmers Market, Inc. (NASDAQ:SFM) and shared Penn Davis McFarland’s views on the company in thepevious quarter. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.