Whole Foods (Nasdaq: WFMI): Stock of the Day

by Katharine Schildt, Assistant Editor, The Oxford Club

In a market full of panic, the last thing you’d expect analysts to recommend would be an upscale grocer.

But that’s exactly what happened yesterday, when Whole Foods (Nasdaq: WFMI) was upgraded by two analysts.

“In summary this quarter we saw much better-than-expected cost containment, leveraging of labor costs, further capex [capital expenditure] cuts, plans to rationalize the store base and positive free cash flow,” said Bob Summers, analyst for Pali Capital.

After its earnings report beat expectations, Whole Foods soared a whopping 37%.

Whole Foods Market is the world’s largest natural and organics retailer, released its fiscal first-quarter report on Thursday. Sales were up to $2.47 billion from $2.46 billion a year ago and it has plenty of cash flow – a difficult achievement in the current environment.

One of the biggest reasons for its latest success is their cash flow, which amounted to $142 million. Thanks to cost cutting, this was the first time in three years that it produced positive cash flow from operations.

Strong numbers, cost controls, bargain hunting and short covering were also responsible for Whole Foods’ boost. But that could be just the beginning.

CEO, Chairman and Co-founder of Whole Foods, John Mackey, said, “We are demonstrating we can operationally adjust to lower sales volumes and believe that this flexibility, combined with our improved balance sheet, will enable us to emerge stronger and better positioned over the long term.”

While this might not seem like the best market for a company like Whole Foods, it’s obviously on top of things. And it’s not just management. Whole Foods has a unique structure where employees’ input isn’t just noted, but rather used and implemented.

This relationship allows each store to adapt locally to its markets and, ultimately, increase sales.

With the new green movement and the popularity of organic foods on the rise, Whole Foods might just be able to maintain their sales for the foreseeable future. And if it can survive in this market environment, it speaks to their ability to grow when the market turns the corner later this year.

• Garmin Ltd. (Nasdaq: GRMN): Stock of the Day
• Children’s Place Retail Stores Inc. (Nasdaq: PLCE): Stock of the Day
• Starbucks Climbing Back

Sign Up now and receive this Free report: Collect 122% in the Next 12 Months From Gold's Surge.

The Single Best Investment for 2009

Forget another stimulus package. Or retreating into "safe-havens" like cash and gold. All you need in 2009 is a small exposure to the "secret" White Cap Index.

It's up as much as 171% straight through Wall Street's meltdown. And one of the latest stocks to be added - an Internet-related venture capital company - is up over 100% since its inclusion into the Index.

Just weeks from now, we'll add another White Cap stock to this market-trouncing index. To get a sneak peek, click here for full details.

Comments

Check out our selection of daily Investment Research:

We Respect Your Privacy

---

What is Investment U?

Since 1999, Investment U has provided impartial, no-nonsense investment advice on how to build long-lasting wealth.

---

Recent Articles

Platinum Services

The Oxford Club is an exclusive, global network of investors, who collectively participate in the pursuit of prosperity and wealth. The Club is renowned for its market-beating, tried-and-true investment principles.

The White Cap Report exclusively identifies companies, White Caps, which - by being among the earliest to gain traction - have secured dominant positions within untapped, billion-dollar markets.

With an elite trading team at the helm, the Xcelerated Profits Report shows any investor how to "invest like a pro," using high-level, yet easy-to-execute strategies that "xcelerate" profits while minimizing risk.

---