Seeking Alpha: Ingles Markets An Okay Supermarket, Sweetened With Real Estate

On the whole, food retailing is not a particularly attractive business in developed markets like the U.S.. Same-store sales growth is typically lackluster, competition is fierce, and margins are thin. New concepts can certainly distinguish themselves, but it is all in all a tough business in which to earn strong returns on capital.

Ingles Markets (IMKTA) is not exactly a tremendous exception. While the company's sales per square foot and margins hold up pretty well relative to the likes Harris Teeter, they definite lag those of Kroger (KR) (which now owns Harris Teeter) or Safeway (SWY), same-store sales growth has been sluggish, and the company's free cash flow generation is not all that impressive. Add in the value of the company's real estate, though, and the picture brightens. The shares currently trade above my "base case" value estimate, but there is upside if commercial real estate prices improve further and/or another supermarket chain looks at Ingles as an incremental growth opportunity.

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Ingles Markets An Okay Supermarket, Sweetened With Real Estate

Investopedia: Kroger Leverages Its Strength To Get Even Stronger

National supermarket chain Kroger (NYSE:KR) appears to be running off the playbook that says strong companies should leverage that strength to put even more distance between them and their rivals. In buying Harris Teeter (Nasdaq:HTSI), Kroger is not only buying a growing, high-quality grocery chain in the Mid-Atlantic, but also positioning itself to take advantage of even more leverage in purchasing, distribution, and logistics. Provided Kroger doesn't interfere with what made Harris Teeter stand out from the crowd, this looks like a deal with good long-term return prospects.

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http://www.investopedia.com/stock-analysis/070913/kroger-leverages-its-strength-get-even-stronger-kr-htsi-svu-wmt.aspx

Investopedia: Kroger Makes The Best Of Tough Environment

For those who think supermarket operators can't produce worthwhile capital gains, Kroger's (NYSE:KR) roughly 18% move up over the past three months is a good counter-argument. What's more, while food retailing continues to be a tough business, made even more difficult by price competition from entities like Walmart (NYSE:WMT) and dollar stores and economic pressures on shoppers, Kroger continues to execute at a high level. Although this stock still does not look all that cheap on a cash flow basis, investors should never be quick to abandon well-run companies.

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http://www.investopedia.com/stock-analysis/2012/Kroger-Makes-The-Best-Of-Tough-Environment-KR-WMT-SWY-WFM1130.aspx

Investopedia: United Natural Foods Has To Spend Money To Make Money

While there have certainly been some pullbacks along the way, including a nearly 10% decline after fourth quarter earnings, United Natural Foods (Nasdaq:UNFI) has, by and large, basked in the love of growth stock investors. And not without some good reasons - United Natural has delivered excellent growth and market share gains, and has recently shown some solid margin improvements. I still think a key fundamental question remains, however, and that is whether investors are properly discounting what the company needs to spend on capex to maintain its growth rate into the near future.

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http://www.investopedia.com/stock-analysis/2012/United-Natural-Foods-Has-To-Spend-Money-To-Make-Money-UNFI-SYY-WFM-SWY0913.aspx

Investopedia: Kroger Has The Quality, But Value Is Less Certain

Nobody seems to have much love for supermarkets these days. With the assumption being that superstores like Walmart (NYSE:WMT) and Target (NYSE:TGT), as well as more specialized stores like Aldi, will pressure the mass-market end while players like Whole Foods (Nasdaq:WFM) and The Fresh Market (Nasdaq:TFM) take the high end, mainline supermarkets like Kroger (NYSE:KR) have largely been left behind by the market. Although this company is an exceptionally well-run player in its industry, management needs to figure out how to generate more cash from its assets for the stock to be more attractive.

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http://www.investopedia.com/stock-analysis/2012/Kroger-Has-The-Quality-But-Value-Is-Less-Certain-KR-WMT-WFM-SWY0910.aspx

Investopedia: Have Misdeeds Opened A Window For Walmart?

A company like Walmart (NYSE:WMT) is not going to get cheap all that often. The company is widely-held, well-known and generally appreciated as a play both on U.S. retail in general and lower-income retail in particular. Better still, Walmart is a virtual legend in terms of using logistics and competitive sourcing to compete on price, and posts excellent returns on invested capital.

As of now, though, it doesn't look as though the bribery issue in Mexico has created enough worry among investors to push these shares to the point of serious undervaluation. Walmart remains a worthwhile hold, but no particular bargain today.

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http://stocks.investopedia.com/stock-analysis/2012/Have-Misdeeds-Opened-A-Window-For-Walmart-WMT-TGT-DLTR-SWY-KSS0522.aspx

Investopedia: The Fresh Market Is A Breath Of Fresh Growth

It's almost traditional (if not quite cliché) to take Wal-Mart (NYSE:WMT) to task for ruining that pastoral ideal that was the American Main Street shopping experience. More recently, neo-hippies have done battle over whether Whole Foods (Nasdaq:WFM) has "gone corporate" by forcing many smaller organic specialty stores out of business, and catering every bit as much to the Audi and soccer mom set as the patchouli and hemp-shirt set.

With that backdrop, it may seem daft to try to enter the market with yet another food market concept. Even with a market already full of choices, companies like Aldi, Trader Joe's and The Fresh Market (Nasdaq:TFM) are showing that customers still aren't completely satisfied with the retail landscape. While The Fresh Market is going to have to prove that it can manage its growth (and make it a profitable growth), this is one of the most interesting retail growth stories going on today.

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http://stocks.investopedia.com/stock-analysis/2011/The-Fresh-Market-Is-A-Breath-Of-Fresh-Growth-TFM-WFM-WMT-UNFI-KR-RDK-VSI-SWY1201.aspx

Investopedia: UNFI - Everything Is Right But The Price

Investors often look to food stocks for their safety and perceived resistance to tough times; even though consumers are pinching pennies, companies like McDonald's (NYSE:MCD), Sysco (NYSE:SYY) and Whole Foods Market (NYSE:WFM) are still selling food. So, when you find a company that offers a growth kicker to what is often a staid industry, it's no surprise that investors take notice. Still, so much is already expected from United Natural Foods (Nasdaq:UNFI) that it seems hard to imagine how the stock will deliver above-average gains, to long-term investors. 


Business is Still Good 
As UNFI's fiscal first quarter results show the company is still delivering good growth. Revenue rose almost 16% on reported basis, with organic growth of just a little under 14%. Food inflation was below 4%; an interesting result, given the numbers reported by Sysco about a month ago, and granting that they operate quite different businesses.


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Investopedia: Does The Fresh Market Have A Real Chance

It may be hard to imagine that America really needs another food retailing concept. There are traditional supermarkets like Kroger (NYSE:KR) and Safeway (NYSE:SWY), organic-focused stores like Whole Foods (NYSE:WFM) and Earth Fare, value options like Aldi, and emerging concepts like Trader Joe's and Lowe's. And that's hardly the end of the list - major discount retails like Wal-Mart (NYSE:WMT) and Target (NYSE:TGT) long ago moved into food retailing, and deep-value "dollar stores" and pharmacies like Walgreen (NYSE:WAG) have added more and more perishable food to their shelves. 

But wait, there's more. A renewed interest in eating food that hasn't sat on a truck for a week has sparked more interest in farmer's markets and community-supported agriculture programs. So this is the market that The Fresh Market (NYSE:TFM) is facing. While this company has been around for a while now (it started in North Carolina in 1982), it is relatively new as a public company and has just begun to build a significant presence outside of the southern U.S.

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http://stocks.investopedia.com/stock-analysis/2011/Does-The-Fresh-Market-Have-A-Real-Chance-TFM-KR-SWY-WFM-WMT-TGT-WAG0902.aspx

Whole Foods Shoppers Out Of Hibernation

So much for the predictions that the Great Recession would produce a permanent thriftiness in American consumers. As the economy slowly crawls its way towards better health, Whole Foods (Nasdaq:WFMI) is seeing a solid recovery in its sales growth and dusting off the plans to roll out still more of these higher-end grocery stores. 


The Quarter In The Bag
By any standard, Whole Foods had a strong fiscal fourth quarter. Sales jumped almost 15% from the year-ago quarter, on a better-than-6% increase in square footage. Same-store sales were up a very healthy 8.7%, as traffic rose almost 7% and "basket" (basically, how much customers spent) was up about 2%

Strong as that was, the company did just as well below the sales lines. Gross margin ticked up 40 basis points and the company trimmed about 70 basis points out of SG&A. That fueled a 100 basis point bump in operating margin, translating into 46% operating income growth.


The link below leads to the full article on Investopedia:
http://stocks.investopedia.com/stock-analysis/2010/Whole-Foods-Shoppers-Out-Of-Hibernation-WFMI-WMT-KR-SVU-RUD-WAG-KR1105.aspx