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Geoff Gannon June 17, 2017

Do Supermarket Stocks Have Long-Term Staying Power?

Read the Free Report on Village Supermarket

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Following Amazon’s acquisition of Whole Foods and the big drop in supermarket stocks – especially Kroger (KR) – I’ve decided to do a series of re-posts of my analysis of the U.S. supermarket industry.

Today’s re-post is a roughly 1,300 word excerpt from the Village Supermarket (VLGEA) stock report Quan and I wrote back in 2014. This section focuses on whether or not a supermarket can be a durable investment. The full 10,000+ word report on Village – along with 26 other reports of similar depth – are now available at my new site, Focused Compounding.

Some facts have changed since this report was written. For example, Amazon’s companywide sales figure is much, much higher than it was in 2013 (the last year for which we had data when we wrote this report).

And – more relevant to the grocery industry – Amazon Fresh has gone from a $300 a year add-on to Amazon Prime to a $15 a month add-on to Amazon Prime (so 40% cheaper).

 

Durability (From the 2014 Report on Village Supermarket)

High Volume Supermarkets are Durable Local Market Leaders

 

Demand for food is stable. Most grocers do not experience meaningful changes in real sales per square foot over time. Changes in real sales numbers almost always reflect changes in local market share. There will be online competition in the grocery business. However, in Village’s home market of New Jersey, direct to your door delivery of groceries has been available for 18 years. Peapod started offering online grocery shopping in 1996. The company was later bought by Royal Ahold. Royal Ahold owns Stop & Shop. Peapod has 4 locations in Somerset, Toms River, Wanaque, and Watchung. These locations offer grocery delivery in Village’s markets. They are direct competition and have been for years. Peapod does not require a $300 annual fee like Amazon Fresh. Instead, Peapod simply adds a delivery charge. Customers also tip the driver. Since the driver normally carries the bags into the customer’s home and puts them on the kitchen counter for the customer – the tip is usually a generous one.  Peapod charges $6.95 for orders over $100. The charge for orders under $100 is $9.95. The minimum order size is $60. Customers can also order online and then drive to one of the 4 Stop & Shops mentioned above (Peapod often uses the second floor of a building where the ground level is Stop & Shop’s retail store) and pick up their own order. Pick-up is free. However, a Peapod employee still collects the groceries and brings them to the customer’s car. So, a tip is still expected. Common tips are probably $5 to $10. So, the total cost of a Peapod home delivery order is probably anywhere from $12 to $20 higher than a trip to a Stop & Shop grocery store. Even a pick-up is probably $5 higher than a normal Stop & Shop visit – …

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Geoff Gannon June 16, 2017

Supermarket Stocks Down: Start Your Industry Research with a Free Report on Village Supermarket (VLGEA)

Read the Free Report on Village Supermarket

Check Out Focused Compounding

Kroger (KR) is down 11% today. The stock’s P/E is now about 11.

Kroger is guiding for same store sales of flat to up just 1% this year. This guidance – combined with Amazon’s purchase of Whole Foods – is probably why the stock is down.

Supermarket stocks are a good area for value investors to research now.  One way to learn about the supermarket industry in the U.S. is to read the report Quan and I wrote on Village Supermarket (VLGEA) back in 2014.

That stock is now at roughly the same price – $25 a share – it was when we wrote about it.

A membership to my new site, Focused Compounding, gives you access to this report on Village Supermarket as well as 26 other stock reports just like it.

A membership to Focused Compounding costs $60 a month. If you enter the promo code “GANNON” at sign-up, you will save $10 a month forever.

Check Out Focused Compounding

Read the Full Report on Village Supermarket

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Andrew Kuhn June 13, 2017

A Blast from the Past: Warren Buffett’s 1977 Shareholder Letter

Whenever someone comes to me asking for advice on how to get started in investing, the first place I direct them to is reading all Warren Buffett’s Berkshire shareholder letters. It is no secret that his letters have tons of golden investing-wisdom nuggets laid upon them. I have read them many times but interestingly enough, I always take something new away from them every time I reread them. In this series, we’re going to go all the way back and start from the beginning and...

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Kevin Wilde June 4, 2017

Wells Fargo (NYSE:WFC)

OWNERSHIP: I first bought WFC in FEB-2010. It is my top holding at 12.5% of my portfolio. Figures as of 24-APR-2017  SUMMARY Wells Fargo is one of the biggest banking / financial institutions in the United States.  The company is organized into three operating segments: Community Banking which offers a complete line of financial services for consumers and small businesses (representing ~50% of earnings); Wholesale Banking which offers banking to larger businesses and government institutions (representing ~35% of earnings); and Wealth and Investment Management which...

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Jayden Preston June 2, 2017

Under Armour (UA): A Peek at 2037

Overview   Under Armour (UA) was founded in 1995 by Kevin Plank, then special teams captain of the football team from University of Maryland. Frustrated by the increase in weight traditional cotton T-shirts incur after heavy sweating, Plank set out to develop T-shirts using better materials. After a year of fabric and product testing, he settled on a compressed synthetic shirt that can be worn beneath an athlete’s uniform. The product provides a snug fit, while wicking sweat away from the body and remaining light....

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