Option Investor
Market Updates

Shopping for Retailers

HAVING TROUBLE PRINTING?
Printer friendly version

Faced with the dilemma of needing a covered dish for a Labor Day cookout, but not wanting to subject partygoers to my cooking, I turned to my local grocers.

My first stop was Albertson's (ABS), the No. 2 U.S. supermarket. The selection was limited, I couldn't get any service, and so I left. Sure enough, Albertson's released second quarter earnings today, and profits were down 10%. Third quarter forecasts were ahead of expectations, as Albertson's plans to close stores and cuts jobs. That will allow the retailer to "drive positive sales momentum by investing a significant portion of these dollars in selected strategic markets." Hopefully my local store is one of those "strategic markets."

Albertson's Daily Chart

I can't blame Albertson's too much for their performance on Monday, since the store was packed with last minute shopper like myself. Besides, their stock hasn't been doing too bad this year. Since January 1st, ABS has gained 32%, mostly remaining inside a nice ascending channel. The stock dipped below in July, but the 200-day moving average was able to push the stock back into the channel. That led to a test of the upper boundary, but ABS has pulled back to the mid-point since then. Support should be decent at $34, but any gains should currently be limited by the upper boundary.

My next stop was Whole Foods Market (WFMI). I wasn't planning on bringing a tofu granola casserole, but that was the only other supermarket on my way. This store has been open for about a year now, but for some reason I never ventured in. It was quite nice actually. A bountiful selection of cheeses and breads, a helpful counter clerk that let me sample everything in the case, and crowded but timely checkout lines. I ended up with squash stuffed raviolis that went over quite well.

Whole Foods Daily Chart

Of course I had to pull up their chart. Not a bad performance in 2001. WFMI formed a double bottom in April, and proceeded to climb above the 50 and 200-day moving averages before consolidating into a flag pattern in June. The stock jumped at the end of July, and is currently battling with a new 52-week high. I doubt they will ever compete with Albertson's and Wal- Mart supercenters on price, but an interesting store nevertheless.

Jeffrey Canavan
Assistant Analyst
www.premierinvestor.net

Intraday Update Archives