Halls of Shrewd'm / US Policy
No. of Recommendations: 9
Greggs was back at 1515-1520 on Friday. I have picked some up again. (The last lot was sold at 1670-1720).
A 4.6% dividend, twice covered, good record of growth, with no withholding tax, and occasional special dividends....
It's very hard to say no to, even if earning are likely to decline 10-15% this year.
It is quite difficult to find a company with the following qualities:
- immune to Trump tantrums or tariffs.
- essentially no debt.
- scaling up without debt or rights issues.
- 'inflation for free', i.e., it does not take special effort to raise prices in line with inflation while maintaining sales
- somewhat immune to recessions, might even benefit from them.
- not affected by AI (directly in real life, or via the bubble).
- pays ordinary people working there fairly for their work, profit sharing.
- provides a good service/product to the lower half of the K-shaped economy.
- considerable charity involvement in feeding the poor (homeless and at schools).
- pays a good dividend every year and pays a fantastic dividend some years, and has a big focus on the dividend.
- would happily eat there myself any time I'm passing, doesn't feel like a luxury.
It's not risk free; as Jim noted food companies aren't an appealing sector. Ozempic is an issue. But they seem to have some interesting ideas in that regard. Excessive growth might be an issue, hopefully they won't chase growth at any cost. The 'Gregg's Pub' concept has achieved an amazing amount of marketing/press coverage for not much effort or expense, but I don't think it will be scalable or especially profitable. Still, I've been wrong before.
TRS
No. of Recommendations: 3
Greggs was down to 1420p on Friday, then rebounded to 1455p.
That's a drop of over 50% from where it was in January this year.
I bought a little bit more at 1425p. If it gets to 1350p, I'll probably buy a bigger chunk.
A P/E of 10x and no debt goes a long way to winning me over.
TRS
No. of Recommendations: 1
I'm in Schwab, is there a way I'm unaware of to buy this stock in Schwab? If not, what's the best broker an American can use to do that?
No. of Recommendations: 1
> A P/E of 10x and no debt goes a long way to winning me over.
My apologies, a slip of the brain here. Low debt currently, and historically they often had net cash.
In the past they paid out (big) special dividends every couple of years when cash builds up a bit much.
TRS
No. of Recommendations: 3
https://www.schwab.com/global-investing"Speak with a Global Investing Services specialist anytime between 5:30 p.m. ET Sunday and 5:30 p.m. ET Friday at 800-992-4685."
I would think Interactive Brokers should let you trade UK stocks.
I'm not American nor in the US so I can't really offer any ideas beyond that.
TRS
No. of Recommendations: 3
A bearish take on Gregg’s
Greggs plc faces slowing revenue growth, rising overhead costs, and declining margins, with new store openings risking cannibalization and a saturated UK market.
Despite a strong brand and loyal customer base, Greggs lacks the necessary pricing power and meaningful product expansion to drive future growth or offset inflationary pressures.
The company's high capex phase strains its balance sheet, with low cash reserves and increasing debt, raising concerns about sustainability and future returns.
GGGSY shares trade at a low P/E and offer a solid dividend, but without clear signs of a turnaround, I rate the stock a Hold and see better opportunities elsewhere.
https://seekingalpha.com/article/4820434-greggs-wh...
No. of Recommendations: 4
Thank you for sharing. However, this article seems a little unserious...
> "Presently, their gross margin is 61.7%, but this is down from 63.6% at the start of 2022. A declining gross margin is usually a sign of deteriorating business dynamics (rising cost of raw materials) or of eroding pricing power, or at least the inability to raise prices to offset these increasing costs. On the surface at least, these are signs of a company in decline"
When the price of a stock drops by more than half, and the gross margin goes from 64 to 62%, you should be paying more attention to the huge variation in the price and less to the tiny variation in the gross margin. For such a small change, you also have to look at issues like noise in the data and general economic malaise etc. I mean, could be real, probably is, but the stock's half the price it was.
> "they may be forced to ... issue shares" "dilution"
...eh? what?
Then two huge paragraphs to big up the fear of revenue cannibalisation, ending with:
> "if we crudely assign equal revenue across shops, we get a figure of 0.172% of the company’s total 2024 revenue as being cannibalized."
Scary numbers indeed.
The whole article can't seem to decide if Greggs is growing so insanely fast that it's eating its own tail, or not growing at all and never will again.
Also seems to be focused on earnings growth when the investment case today is that the stock is on a p/e of 10-11 and doesn't *need* heaps of growth to be a compelling investment. IIRC Jim had a heuristic along the lines of, if you roll up divis and growth on a stock over the next 5 years and it will likely be on a single digit P/E in 5 years time based off the current price, it's probably alright.
Overally I found the text exhauting, waffly and clutching at straws. A rather desperate bear case.
If the stock was still up at 2500p-3000p or whatever it might be worth worrying about fine details, but not at 1400p. Reading through the mountain of waffle, my main concern is 'is this paragraph discussing a genuinely serious issue and if so, is it likely priced in'.
I saw nothing to concern me here, from that perspective.
I note that for all the talk of Greggs being unable to compete with McDonalds, during their trip, the author actually kept going back to Greggs again and again as the affordable and tasty choice (opening paragraph).
TRS
No. of Recommendations: 1
By the way, if anyone enjoys reading company accounts, the Gregg's annual report is actually very straightforward and pleasant to read, and does quite a good job at capturing how the business works and how management think.
https://data.fca.org.uk/artefacts/NSM/Portal/NI-00...In particular, check out the KPI section (38-39) where they compare with previous years and explain what the measure is trying to capture and why they're tracking it, and the risks sections (53-56 and 64-71).
It is perhaps a little too 'cute' and 'socially aware' for my tastes in company results documents, but it is at least very accessible.
TRS
No. of Recommendations: 0
GRG was 1410p yesterday morning and 1561p by the end of this afternoon.
Congrats to anyone who bought in during the last two days. Who knew sausage rolls could be so exciting?
Move appears to be simply market mood, I haven't seen any news.
TRS
No. of Recommendations: 0
Biz rates cut in the budget.
