This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Whole Foods Investors Were Warned

Stocks in this article: WFM TFM NGVC WMT

NEW YORK (TheStreet) - Investors in Whole Foods (WFM) are starving today for some good news. But that's not likely to come anytime soon.

I'm not going to rub it in, but back in December, I didn't win many friends for advising investors to sell the stock. At the time, the shares traded close to $56. The stock closed Wednesday at $38.93, down 30% since my recommendation.

My caution had nothing to do with Whole Foods' status as a well-run company. Instead, it was because Whole Foods had gotten too good for its own good. The company's name, which became synonymous with health and wellness, had drawn too much competition. The stock had traded on enormous growth expectations. The price-to-earnings ratio then was close to 40. The recent decline has dropped that ratio to 25.

WATCH: More market update videos on TheStreet TV | More videos from Brittany Umar

Although Whole Foods was a strong growth producer, it was too risky to ignore how quickly rivals such as The Fresh Market (TFM) and Natural Grocers (NGVC) had grown in a relatively short period of time. And last month, when Walmart (WMT) announced its entry in the organic foods industry, Whole Foods' expiration date drew closer.

The company's fiscal second-quarter earnings report Tuesday confirmed these fears. Earnings of $142 million, or 38 cents per share, were flat. Wall Street was looking for an 8% jump. Even though revenue was up close to 10% to $3.32 billion, it still missed estimates of $3.34 billion.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,356.87 +288.00 1.69%
S&P 500 2,012.89 +40.15 2.04%
NASDAQ 4,644.3120 +96.4780 2.12%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs