INVESTOLOGY 101

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• INVESTOLOGY 101
• Kevin Yip
• Gary Chan
• Connie Poon
• Mack Wilson

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COMPANY PROFILE
Company Profile Industry Analysis Key
Statistics Technical Analysis SWOT
Analysis Recommendation

• HISTORY
• Original Whole Foods Market opened in 1980 from
  a merge between Safeway and Clarksville
  Natural Grocery
• 1990s Rapid growth from opening new stores and
  acquiring other natural food chains
• 2004 Entered the United Kingdom
• Acquired competitor Wild Oats Market in 2007
• April 2007 Whole Trade Guarantee
• Stores in 38 United States states, 6 in Canada,
  and 5 in United Kingdom
• Current operations focus on transitioning Wild
  Oats to Whole Foods and increasing stores in
  the U.S., U.K., and Canada

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COMPANY PROFILE
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Analysis Recommendation

• GENERAL INFORMATION
• Is the world's leading retailer of natural and
  organic foods accounts for more than 37 of
  organic/natural food sales
• Organic movement is beginning to expand to less
  wealthy or educated neighborhoods
• Large company size --gt economies of scale
•  Whole Foods Market only sells products that
  meet its self-
• created quality standards for being "natural
• Policy of donating at least 5 of its annual
  net profits to
• charitable causes
• Competitors Wal-Mart and other grocery stores

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INDUSTRY ANALYSIS
Company Profile Industry Analysis Key
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Analysis Recommendation
Whole Foods Kroger Co. Safeway Industry (average)
Market Cap 6.23B 14.56B 10.16B 601.1M
Qtrly Rev Growth (YoY) 7.0 0.3 -7.0 9.2
Gross Margin 34.6 24.1 29.9 25.8
P/E 37.4 88.9 12.4 14.9
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INDUSTRY ANALYSIS
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Analysis Recommendation
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KEY STATISTICS
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Analysis Recommendation

• Price 36.56
• Forward P/E 25.17
• Market Cap 6.05B
• Beta 1.29
• Held by Institution 69.70
• Profit Margin 2.07
• Return on Equity 8.40

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TECHNICAL ANALYSIS
Company Profile Industry Analysis Key
Statistics Technical Analysis SWOT
Analysis Recommendation
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TECHNICAL ANALYSIS
Company Profile Industry Analysis Key
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Analysis Recommendation
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STRENGTHS
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• Unique among grocery stores
• High quality, organic, fresh, and specialty items
• Not unionized
• Whole Foods customers shop primarily at Whole
  Foods (strong loyalty)
• Partakes in the popular green movement
• Owns real estate in expensive districts
• Use of regionally farmed produce will limit
  exposure to food borne illness epidemics
  (consumer reassurance)

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WEAKNESSES
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• VERY expensive (whole paycheck)
• Strongly effected by economic downturns
• Does not carry popular brand name products
• Considered luxury shopping (could be good or
  bad depending on economy)

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OPPORTUNITIES
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Analysis Recommendation

• Can expand further in the nutrition/organics
  niche
• Organics are in growing demand
• Economic recovery will help Whole Foods expand
• Can expand on prepared foods
• Still available expansion in US and foreign
  countries (currently occupies UK and Canada)

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THREATS
Company Profile Industry Analysis Key
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Analysis Recommendation

• Foreign exchange rates
• Economic downturns
• Supermarkets, like Safeway and Wal-Mart, impede
  on Whole Foods niche by offering cheaper
  organic produce
• Trader Joes expansion
• Low cash on hand

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RECOMMENDATION
Company Profile Industry Analysis Key
Statistics Technical Analysis SWOT
Analysis Recommendation

• Earning Estimates
• Current P/E 37.4
• Forward P/E 25.2
• Economic Recovery
• Recovery Benefit Whole Foods
• Continued Stagnation Stifle Growth
• Available Expansion
• Dependent on Economy
• Recent UBS upgrade on Whole Foods from sell to
  neutral
• Short-Term Hold
• Long-Term Hold