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The saying goes, 'Hindsight is a wonderful thing.' Well, when it comes Greggs (LSE: GRG) shares, I wish I had bought the shares sooner!
Let's break down whether the sausage-roll supremo is still one of the best stocks to buy.
The Gravy train continues!
The growth story of Greggs from a share price, earnings, presence, and return perspective is very interesting. It's one of the reasons why I'm upset that I didn't join the team earlier. However, I still put a lot of money into their till as I can't resist a sweet drink or baked delight from one of their stores, which I can't escape from no matter where I go.
Recent developments include the Greggs share price continuing its impressive rise, and excellent trading news.
Shares are up 31% in the 12-month period from 2,365p this time last year, to current levels of 3,114p.
Interim results released at the end of July revealed an impressive 14% increase in total sales for the business. In context, this equates to £1bn in tiling. I can't comment on how much I put in here for my sweet tooth! In addition, profits increased by 16% compared to the same period last year.
Present and future
Let's dig into some basics today to help me answer my title question. I will admit that the current price is too high for my liking. Shares trade at a price-to-earnings ratio of close to 23. Is growth already priced here? Can earnings take the appetite of investors? I will look into this. However, I believe that sometimes you have to pay a premium to get the best stocks out there.
From an earnings perspective, the 3.34% dividend yield is attractive, but nothing to write home about. This can grow, depending on how the business is doing. However, I understand that benefits are not guaranteed.
Greggs doesn't look like he's resting with strong growth on the company's agenda. This is demonstrated by strategic partnerships with delivery giants including UberEats and Just eat it access to another market. In addition, it continues to identify important concessions such as transportation facilities such as train stations and airports. Also, extend opening hours to increase sales and profits.
Risk and my decision
I have two important issues. The recent cost of living crisis has shone a light on the need for consumers to budget ahead. Cutting back on sweet treats could hurt Greggs' earnings and returns if the current volatility continues for too long. With continued economic turmoil, wage inflation can mean price increases, which can affect a company's competitive advantage as well. I will address both of these issues going forward.
Personally, I think Greggs is a great investment and has a lot of growth to come. It is definitely one of the best stocks to buy FTSE 250 index, in my opinion.
I will be watching with interest to see if I can find a better entry point to pick up some stocks once I have some free money.
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