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Three Reasons to Buy Sprouts Stock

If you’re an organic food fanatic, you’ve probably heard of Sprouts Farmers Market. The fast-growing food retailer is a go-to alternative to traditional grocery stores. And with its growth runway, it might even be the perfect acquisition target. Here’s why. This food retailer is poised to take over Whole Foods and other traditional food retailers. Here are three reasons to buy Sprouts stock now.

Sprouts Farmers Market is a food retailer

Sprouts is a popular food retailer with locations all across the country. In addition to their traditional grocery store, Sprouts also offers a fresh produce section, as well as a deli with prepared entrees and sides. It also has a butcher shop and fish market. If you live near a Sprouts location, be sure to subscribe to TCPalm to receive their stories.

Sprouts is dedicated to reducing food waste, and it has set a goal of diverting 90 percent of its food waste from landfills. Sprouts distributes the leftover food through three channels. First, it donates perfectly edible but unsellable products to local hunger relief organizations. Secondly, it converts the food into animal feed, which helps reduce greenhouse gas emissions. And lastly, it turns leftover food into nutrient-rich compost for agricultural soil.

Sprouts was founded 20 years ago, and it has since expanded to over 350 locations in twenty-three states. Its first location in New Jersey was in Marlton Crossing, just off Route 73 in Evesham Township. Sprouts stores offer fresh produce, natural foods, vitamins, household items, and local foods. Its planned Port St. Lucie location will be the company’s first store in Florida, but the retailer is also planning on opening a location in Haddon Township in 2020.

Sprouts has several types of employees and offers great employment opportunities. The store features a 100 percent money back guarantee on most products, and employees must provide a receipt if they are unhappy with their purchase. As a part of its commitment to sustainability, Sprouts recently received an AAA MSCI rating for its ESG efforts. The rating signifies that the company manages ESG risks effectively.

It is a go-to successor to Whole Foods

Sprouts is an incredibly interesting new stock to consider. Unlike Whole Foods, which has been around for a while, Sprouts never generated the buzz associated with that brand. Instead, it refined its positioning around healthy living at a lower price. Sprouts has aggressively expanded from its base in the Southwest to new markets on the East Coast and even built out service departments to serve a variety of eating occasions.

Sprouts’ Q2 performance is an early indicator of trouble ahead. While Sprouts still retains a large portion of its core customer base, its concept isn’t sufficiently differentiated. Plus, its stores are too small to be an all-in-one shopping destination. Moreover, consumers are increasingly shopping online and prefer to visit fewer stores post-COVID. As a result, Sprouts has struggled to fund new stores and repurchase shares, and its stock is falling as a result.

However, this recent dip could be a blip in the company’s growth. Sprouts’ stock is down less than 1%, but it lacks the “healthy” buzz of Whole Foods’ prime. With competitors adding healthier products and a focus on healthier living, the stock isn’t particularly volatile. In fact, it has nearly doubled its stock price since the beginning of the year, but investors should remain cautious.

It has a long growth runway

In the past few years, emerging economies have developed industrial bases and have grown their populations, thereby increasing their demand for goods and services. The companies that are positioned to benefit most from this trend are those that offer growth-oriented products and services with a long growth runway. Despite recent volatility in the market, the company is still a strong buy, especially when its growth prospects are positive. Its stock has a price-to-sales ratio of 7.4x, comparable to Apple (NASDAQ:AAPL).

As of this writing, macroeconomic conditions are still stable, but geopolitical risks are growing. In addition to that, SE stock has taken one step forward and two steps back. Since last year’s rout, bears have sold on every rally attempt. As a result, many high-growth companies have rallied back from the bottom of the pandemic, but are currently undergoing a massive corrective phase.

It is a potential acquisition target

Sprouts stock has recently gained almost 3 percent in response to rumors that Albertsons is considering acquiring it. While the potential acquisition isn’t yet a done deal, the company has been gaining recognition as a healthy supermarket chain that has become a popular destination for health-conscious shoppers. And if the reports are true, this acquisition could be the catalyst that makes Sprouts stock a valuable investment.

Sprouts’ stock is trading at a very low forward P/E multiple compared to its peers. This is a good sign, as it indicates that the company hasn’t yet experienced any material negative impact on its growth. In addition, the forward P/E ratio is forecasted to decrease year over year from 2020 to 2021. Although it’s a strong year compared to 2017 to 2019, this trend will likely continue.

Sprouts’ poor performance in Q2 may be a sign of things to come. The company has struggled to attract a large percentage of its core customer base. This is because the concept isn’t differentiating enough from its competitors. In addition, Sprouts’ stores are too small to be a one-stop-shop, and most consumers are already familiar with healthier options. Moreover, Sprouts’ business model hasn’t been able to successfully implement its strategy to fund new stores and buy back shares.

It has a relatively clean balance sheet

A healthy balance sheet indicates that a business is wise and uses its assets and debt to advance itself. It is not always a good idea for a company to have too much equity and too little debt. It should have the right balance of both. While having assets and debt is good, too much equity can also reflect poor business practices. Investors want a higher return on their investment. A healthy balance sheet will attract foreign strategic partners.

Most companies have dirty balance sheets because their owners don’t know how to maintain a clean balance sheet. Moreover, buyers discount overdue receivables and won’t pay for them if they are uncollectible. Slow collections are bad for buyer confidence and could lead to price reductions. If possible, pay off debts or reduce them as much as you can. Whether you have a clean or dirty balance sheet is up to you.

A clean balance sheet can reduce downside risks and show the company’s ability to obtain loans and make payments. A balance sheet is one of three core financial statements and lists the company’s assets, liabilities, and shareholder’s equity. It offers investors a snapshot of a company’s financial health and reveals how much equity investors have invested in the company. It also provides an indication of how much cash is available to pay bills.