The stock market has been under immense pressure lately amid growing concerns over multi-decade high inflation, the Fed’s hawkish tilt, ongoing geopolitical crisis, and the possibility of the U.S. economy sliding into a recession. Yesterday, Fed increased its benchmark interest rate by 75 basis points, the highest hike since 1994. Furthermore, officials slashed their outlook for 2022 economic growth, expecting just a 1.7% rise in GDP, down from prior guidance of 2.8%. These factors are expected to keep the stock market highly volatile in the coming months.
Amid the risk-off environment, consumer staples, including grocery stocks, can offer steady growth, low volatility, and boost portfolio diversification. Grocery stocks are known for providing a solid defense against market correction due to inelastic demand for their products. Moreover, investors can capitalize on high costs being passed on to consumers amid inflated grocery prices.
Natural Grocers by Vitamin Cottage, Inc. (NGVC)
NGVC retails natural and organic groceries, dietary supplements, and household and general merchandise in the United States. The company operates its retail stores under the Natural Grocers by Vitamin Cottage trademark. It owns and operates more than 162 stores in 20 states. Additionally, it offers science-based nutrition education programs to assist customers in making informed health and nutrition choices.
Last month, NGVC’s Board of Directors declared a quarterly cash dividend of $0.10 per share, which was paid on June 15, 2022. Its Board of Directors also authorized an extension of the company’s share repurchase program. Approximately $8.3 million worth of the company’s common stock may be repurchased under the program. These developments reflect the company’s strong financial performance and commitment to creating shareholder value.
In the fiscal 2022 second quarter ended March 31, 2022, NGVC’s revenues increased 4.9% year-over-year to $271.80 million. Its operating income grew 32.2% year-over-year to $8.90 million. The company’s adjusted EBITDA rose 11.8% from the year-ago value to $16.10 million. In addition, its net income and earnings per share came in at $6.40 million and $0.28, registering an increase of 35.1% and 33.3% from the prior-year period, respectively.
The $1.10 billion consensus revenue estimate for the fiscal year 2022, ending September 2022, represents a 4.2% improvement from the last year. Analysts expect NGVC’s EPS for the ongoing year to increase 5.5% year-over-year to $0.96. Also, the company’s EPS is expected to grow at a CAGR of 5.1% over the next five years.
NGVC’s shares have increased 30.3% over the past six months and 47.5% over the past year to close yesterday’s trading session at $17.11.
NGVC’s POWR Ratings reflect this promising outlook. It has an overall grade of A, equating to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
NGVC has a grade of A for Sentiment and B for Quality, Stability, and Growth. Within the A-rated Grocery/Big Box Retailers industry, it is ranked #3 of 38 stocks. To see additional POWR Ratings (Value and Momentum) for NGVC, click here.
Ingles Markets, Incorporated (IMKTA)
IMKTA operates a chain of supermarkets in the United States. The company provides food products, including grocery, meat, and dairy products, and non-food products, such as fuel centers, health care products, and pharmacies. It also owns a milk processing and packaging plant. In addition, it offers home meal replacement items. IMKTA operates more than 189 supermarkets, 111 pharmacies, and 107 fuel stations.
IMKTA’s net sales increased 16.3% year-over-year to $1.38 billion in the fiscal 2022 second quarter, ended March 26, 2022. Its gross profit rose 12.3% from the prior-year period to $348.60 million. In addition, the company’s net income and earnings per share for Class A Common Stock came in at $68.60 million and $3.61, registering a rise of 31.4% and 39.9% year-over-year, respectively.
Analysts expect IMKTA’s revenue for the fiscal year 2023 (ending September 2023) to come in at $4.70 billion, representing a 3% rise year-over-year. Also, Street expects the company’s EPS to grow at a 14.5% CAGR over the next five years.
The stock has gained 44.8% over the past year to close yesterday’s trading session at $88.95.
IMKTA’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall grade of A, translating to a Strong Buy in our proprietary rating system.
IMKTA has a grade of A for Quality and B for Growth, Value, and Stability. Within the same industry, it is ranked #2 of 38 stocks. To see additional POWR Ratings (Sentiment and Momentum) for IMKTA, click here.
Want More Great Investing Ideas?
NGVC shares were trading at $16.53 per share on Thursday afternoon, down $0.58 (-3.39%). Year-to-date, NGVC has gained 17.35%, versus a -22.56% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions. More...
More Resources for the Stocks in this Article
|Ticker||POWR Rating||Industry Rank||Rank in Industry|
|NGVC||Get Rating||Get Rating||Get Rating|
|IMKTA||Get Rating||Get Rating||Get Rating|