Stocks That Will Hurt Your Retirement: Whole Foods (WFM)
Whole Foods Market, Inc. (NASDAQ:WFM) has the same problem that Chipotle does, and I’m not talking about food safety issues.
Like Chipotle, Whole Foods was early to the healthy and organic movement. You could even argue that they were a founder of the movement and one of its biggest early beneficiaries.
The problem, as with Chipotle, is that there is no real durable advantage there and nothing to stop its rivals from selling the same products … and doing so more cheaply.
I like Whole Foods and I can credibly say that the average American eats healthier today in no small part due to the store’s influence. But that doesn’t mean I want to bet my retirement on it.
WFM trades for 21 times expected earnings, which is a bit rich for a grocery store stock. Yes, Whole Foods is a premium store. I get that. But virtually every grocer in town is gentrifying its product lines, and you also have a budding new competitive threat from Amazon with home delivery … in some cases done by aerial drones.
Buy Whole Food’s produce if you like, but I’d steer clear of the stock.