Natural Grocers (NGVC)
In the month leading up to Amazon’s purchase of Whole Foods, the company appeared on my radar as a good value. It was too late to make an investment, as I didn’t get the chance. However, Natural Grocers also reached value territory and plunged an additional $3, dropping from around $8 to a 52-week low of $4.79, after falling from a 52-week $13.49. The 2-year chart shows a far more dramatic fall from grace.
At $5 a share, from my view was worth an initial stake ahead of earnings with the intention of averaging down after another plunge was likely to occur after earnings. The average-down opportunity hasn’t come, yet.
With an estimated 27% of the float on the short side, a strong 1-day rally may spark a definitive reversal. The average number of days to cover is a staggering 14.
Sales and same store performance are showing resilience, at 9% and 2% for the most recent quarter.
A number of headwinds facing the future are sure to keep uncertainty at elevated levels, the most obvious of which is to never underestimate competitive pressures from bigger chains in the space. Debt to equity and forward P/E do not show much promise, but EV/EBITDA is a healthy 3.74.
In the next few months, NGVC will push-through the holiday season and strive to keep its revenue growth strategy intact. Will the stock be able to close the GAP from the $8 drop or fall back to $5 or lower? I don’t see the stock trading flat from this point.
The first sign of a post-earnings bullish slow down may be underway.
The Doji posted 11/24/17 conveys a sense of indecision or tug-of-war between buyers and sellers. Prices moved above and below the opening level during the session, but closed at or near the opening level. The result is a standoff. Neither bulls nor bears were able to gain control and a turning point could be developing.
About NGVC:
Employees: 2,600+
Natural Grocers by Vitamin Cottage, Inc., together with its subsidiaries, operates natural and organic groceries, and dietary supplement retail stores in the United States. Its stores offer natural and organic grocery products, such as organic produce; bulk food and private label products; dry, frozen, and canned groceries; meat and seafood products; dairy products, dairy substitutes, and eggs; prepared foods; bread and baked products; and beverages. The company’s stores also provide private label dietary supplements; body care products comprising cosmetics, skin care, hair care, fragrance, and personal care products containing natural and organic ingredients; pet care and food products; household and general merchandise, including cleaning supplies, paper products, dish and laundry soap, and other common household products; and books and handouts. As of July 27, 2017, it operated 140 stores in 19 states. The company operates its retail stores under the Natural Grocers by Vitamin Cottage trademark. Natural Grocers by Vitamin Cottage, Inc. was founded in 1955 and is headquartered in Lakewood, Colorado.