Where Does WFM go from here? Here's my humble opinion...
The grocery business is a dog-eat-dog world. Ultra competitive. The CEO has stated that pretty much in the recent call by saying WFM going forward will face "tougher gross-margin comparisons" and will expand "value offering". It means they are no longer will be able to charge as much premium as they have in the past. Meaning PE slowly comedown. Competition is coming from Walmart, Target, Costco, Super Value, Safeway, Ralph, Kroger, Trader Joes (growing company), Sprouts (growing company). Very good company but the reality is setting in as far as expectations going forward. So where from here? See the chart for Costco and Safeway. Costco is still going up, but I think WFM follows SWY chart long term. WFM double top right in the $90s. PE will come down to 20-25 PE. The question is, since their markup was huge and will be lowering it going forward, how many times will they dispoint before stabilizing? The next two years will be tough on comparisons due to competition.
I heard it before, very boring. WFM is still growing, more stores coming. In every business you make adjustment, WFM will make adjustments. There last quarter was very good, look at the numbers, but guidance going forward is a little tentative, but not worrisome. I say buy on the dips, I think WFM should correct more, but start buying now, but a little at a time. If you have $10 grand don't put the entire 10k in today, at little taste here and there. Soon enough, WFM will be 98, probably before next earnings, this is how it goes. I think alot of the "bad news" is being discounted now. If WFM get in the low 80's or even high 70's, you have a gift. Then hold until mid to upper 90's and sell it. You can always hold, but I like my profits, don't want to gamble with that.
Look at the latest food scare in Europe over the contamination of beef with horse meat - this is just the beginoing of food scares we will all be looking very hard at the siurcwe of our food- the only way for WFM is up up up from here.
I suspect short traders will be increasing their positions at these levels. If the short position increase in the next two weeks, then it will confirm downward trend to price. Short position was 1.80% as of 1/31/13. In two weeks we will know if this ratio has gone up or down. If up substantially, WFM is lower in the next few quarters.