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If you don't write down what you're thinking, you're short-selling yourself on some of your best ideas. That's why this is here.

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Dear USPS: You're welcome. Love, Amazon.com

11/11/2013

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The recent Amazon/USPS deal is nothing more than an experiment for now. Sunday delivery in LA and NY sounds like a great first step and more cities will follow suit if it works out. Of course consumers are the big winners when things like this happen, but the potential implications of this for the USPS are fascinating to consider if nothing else.

I mean think about it. One of the biggest headwinds the USPS is facing is that what they're delivering is becoming irrelevant and people don't need it. I mean with all due respect to Newman, who needs mail? Hey I said all due respect. But seriously, we know that free and convenient shipping is the biggest consideration for online shoppers and there's no reason to think there will be a fundamental shift in this thinking. It's why Amazon Prime continues to grow its user base quarter after quarter. But this whole Sunday offering could very well be the very first step in an epic turnaround for the USPS. If Amazon is able to exploit the USPS for delivering something people actually want (hey you ordered it after all), well hey that's all the better.

At the end of the day any product is only as good as its distribution. We've seen it play out time and time again and it's why Amazon and Bezos continue to make mind bending investments in shipping and fulfillment. Love 'em or hate 'em, the USPS has a pretty hefty distribution network already set up. Amazon might just be bringing it into the 21st century.

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How Investors Need to Look at Whole Foods' Quarter

11/7/2013

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Whole Foods earnings are out. It was a little light on sales, beat on the earnings number but it looks like the market is reacting to the comp number of 5.9%...that's the problem with bringing in those awesome numbers quarter after quarter. At some point you just become a victim of your own success. Click here to link to the company release. The chart above is from a blog post I made back in May showing WFM's historical comps and trading multiples.

As Whole Foods continues to grow, competition is heating up. Concepts like The Fresh Market, Fairway, Sprouts, Trader Joe's, Wegmans and many other local and regional establishments are offering more to consumers every day and Whole Foods is being forced to compete more on pricing. Price matching, etc. was a primary contributor to the lower comps this quarter as inflation remained relatively moderate. None of this comes as any surprise.

I don't think it's reasonable to think that these pricing pressures will abate; this space is only going to heat up and I believe we are entering a new stage of Whole Foods' growth. In fact I wouldn't be surprised to see the market start assigning a bit lower multiple as time goes on here. It's going to happen; it's not a matter of if, but when. Given the current pace of store openings there is a long timeline for this thing to play out, but I would not plan on the stock trading at its 45 multiple forever. Just for context Kroger trades at about 15 times earnings and don't forget they just bought Harris Teeter which absolutely brings them in more direct competition with Whole Foods. These concepts with bigger store footprints will be able to compete more on pricing thanks to scale and they are also bringing more organics and naturals into their stores every day.

This all leads me to say that price is becoming extremely important when looking to buy WFM shares. The stock is down about 10% today and I suspect we'll see that sentiment hold. With that said, "opportunistic" is the key word and given the guidance management's offered I actually think the stock looks like a market-beater if this selloff holds. Of course it will probably go lower, but like Buffett says, net-buyers of stocks should route for pullbacks like these assuming the companies in which we are investing are worthy. I think Whole Foods still is.
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    My name is Jason A. Moser and I'm lucky enough to have a job doing what I love to do: investing. But my family, golf, music, watercolors, reading, writing, current events...these are all things that matter to me. Consider yourself warned.

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