I think retail stocks are kinda boring, but I think there are some beaten down stocks right now at good value. I bought TSCO in June after its huge beat down and sold it in August after a 25% gain. SFM looks interesting to me as a potential value buy since it followed the same suit, with SFM dropping >50% from its 52 wk high and is currently trading at <14x p/e.
The underlying business hasn’t fallen apart: Sprouts is still profitable, generates strong cash flow, carries essentially no conventional long-term debt, and has been aggressively reducing its share count. The bigger long-term story is store expansion as they’re targeting roughly 10% annual unit growth, while newer stores have generally performed well. Private label is also becoming a bigger part of the business, which should help margins and differentiation.
The obvious concern is comps. Same-store sales have recently turned slightly negative, which is a big reason the market has repriced the stock. The question is whether that represents structural slowdown or justified repricing. There’s a decent path back to meaningful EPS growth without needing an aggressive valuation multiple.