Check Out This Grocer

 | Nov 07, 2012 | 11:30 AM EST
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Whole Foods Market (WFM) has been one of the market's great success stories since its IPO in January 1992 -- since the start of the bull market in March 2009, the stock has surged 700%. This raises the question: "Has the big money already been made?"

The company currently operates 339 natural and organic food supermarkets in the U.S., Canada, and the U.K. It opened nine stores in the third quarter. It expected to open seven additional stores in the fourth quarter for a total of 25 new stores opened during the fiscal year.

Whole Foods reports fiscal fourth-quarter earnings after the close today. The consensus estimate calls for profit of $0.60 a share, up 43% from a year ago. Sales are seen rising 24% to $2.9 billion, which is a nice acceleration from 14% year-over-year growth in the second quarter.

Three months ago, fiscal third-quarter profit rose 26% from a year ago to $0.63 a share. Sales rose 14% to $2.7 billion. Same-store sales in the quarter rose an impressive 8.2%. There's no reason to think Whole Foods won't deliver another exceptional quarter of growth, but whether or not it will be enough to help the stock remains to be seen. After a massive price gains, it's starting to look long in the tooth.

Keep in mind that major averages remain in a distribution phase, which is a difficult environment for high-multiple stocks like Whole Foods to make headway. Whole Foods currently sells at 42x trailing earnings and 34x forward earnings.

While Whole Foods' huge price in recent years makes it a much riskier buy at current levels, competitor The Fresh Market (TFM) could still be in the early stages of a move. It's a much younger company, and still in the early stages of growth after its IPO in November 2010 at $22.

As of July 29, the upscale specialty grocery retailer operated 121 stores in 24 states in the U.S. Most of its locations are located east of the Mississippi so there's plenty of room for expansion, particularly in California.

In August, the company reported profit of $0.28 a share, up 27% from a year ago. Sales increased 21% to $313 million. Same-store sales rose 8%. It opened five new locations in the quarter with plans to open 14 to 16 new stores in fiscal 2012.

The compay is due to report earnings on Nov. 28 before the open. Analysts are looking for profit of $0.26 a share, up 37% from a year ago with sales up 21% to $318.1 million.

Recent price and volume trends in The Fresh Market look pretty good. The stock has been consolidating gains since late August and is trading back above its 50-day simple moving average, and currently working on the right side of a base. The stock has climbed to within 7% of its all-time high. Now that the election has passed, it's not out of the question the market could flash a buy signal soon. If it does, this fast-growing new issue has solid institutional sponsorship and could outperform going forward.

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