Sprouts Farmers Market: A New Age For Grocers Has Dawned
- Sprouts Farmers Market has surged 470% since I became bullish in 2021, driven by superior management and a bifurcating grocery industry.
- Despite its high valuation, SFM's strong growth potential and market shift away from middle-market grocers like Kroger and Albertson's continued double-digit sales growth.
- Projecting its growth into the 2030s, Sprouts may be reasonably valued today, given that its sales are currently far below its expanding total addressable market.
- Sprouts is far more expensive than Kroger and Albertsons, but is likely undervalued to Costco. Compared to Costco, Sprouts has more recession risk but far superior long-term growth potential.
- SFM's current valuation appears risky due to potential demand fluctuations and fickle short-term momentum traders.
Kobus Louw
In 2021, Sprouts Farmers Market (NASDAQ:SFM) was stuck in a trading range as grocers grappled with rising input prices and inconsistent demand. SFM was not a popular stock, as sentiment regarding grocers was generally negative amid increased operating
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