10 Best Grocery Stocks To Invest In Now

8. Sprouts Farmers Market Inc. (NASDAQ:SFM)

Number of Hedge Fund Holders: 35

Sprouts Farmers Market Inc. (NASDAQ:SFM), based in Arizona, operates a supermarket chain specializing in a diverse selection of gluten-free, natural, and organic foods. Emphasizing quality, freshness, and affordability, the company offers a wide selection of produce, bulk foods, meat, seafood, and prepared foods.

For the third quarter, Sprouts Farmers Market Inc. (NASDAQ:SFM) reported earnings per share of $0.91, up 39% year-over-year, surpassing the consensus estimate of $0.77. Revenue reached $1.946 billion, marking a 14% increase from the previous year and beating forecasts by $70 million. The company’s comparable store sales also grew 8.4%, well above the expected 4.5%, highlighting the growing appeal of Sprouts’ unique market strategy.

Following the Q3 report, CFRA raised its price target for Sprouts Farmers Market Inc. (NASDAQ:SFM) to $136 from $109, maintaining a Hold rating. Despite the positive results mentioned above, the company faced pressures on SG&A expenses due to heightened investments, increased incentive compensation, and higher e-commerce fees. Looking ahead, CFRA anticipates another strong growth year in 2025, with comparable sales expected to exceed 4% and EPS growth potentially surpassing 20%, assuming current investments will conclude by then.

FPA Queens Road Small Cap Value Fund stated the following regarding Sprouts Farmers Market, Inc. (NASDAQ:SFM) in its Q2 2024 investor letter:

“Sprouts Farmers Market, Inc. (NASDAQ:SFM) is a natural grocer with great merchandising and best-in-class gross margins.19 The company has attractive returns on capital, great new store economics, and they are accelerating their unit growth from 12 stores a year to 35 stores in 2024 on a base of roughly 400 stores. Over the past year, the stock has performed well after reporting strong operating results and from a low initial valuation. The stock price jumped when the company reported 2023Q4 results and gave strong 2024 guidance on February 22, 2024. We have maintained our position and allowed it to appreciate. Although SFM’s share price has increased faster than bottom line results, we believe SFM still trades in the “range of reasonableness” for a high-quality, non- cyclical franchise that can reinvest capital at attractive rates of return.”