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HomeMarketIf I’d invested £10k in Greggs shares two years in the past...

If I’d invested £10k in Greggs shares two years in the past right here's what I'd have as we speak


Picture supply: Getty Photos

Greggs (LSE: GRG) shares have smashed it for the reason that pandemic. I don’t maintain the excessive avenue bakery chain in my portfolio, however I want I did. Now I’m questioning if it’s the correct time to purchase.

The Greggs share worth has soared by 47.1% within the final two years. The inventory would have turned a £10,000 funding into £14,710. With dividends, the overall can be nearer to £15,500.

In fact, with hindsight we’d all be millionaires. Currently, Greggs shares have slowed. They’re up simply 2.93% over the past 12 months. Over the identical interval, the FTSE 250 as a complete grew 5.72%.

Traders love Greggs, judging by the site visitors on our web site, however there’s a problem right here. Possibly they find it irresistible just a little an excessive amount of. 

FTSE 250 progress inventory

There’s definitely lots to love. 2023 noticed “another year of rapid growth and strong progress”, within the phrases of CEO Roisin Currie. Complete gross sales jumped 19.6% to £1.81bn, as Greggs expanded its community of shops past 3,000. It additionally bought extra per retailer, with like-for-like gross sales up a tasty 13.7%. Pre-tax income jumped 13% to £167.7m.

In October 2021, it introduced bold plan to double gross sales inside 5 years and it has made a robust begin. If it disappoints, the backlash might be brutal, which brings me to that situation I discussed.

The shares are a bit costly. Buying and selling at 22.34 instances earnings they’re 70% greater than the FTSE 250 common of 13.1 instances. Markets have priced plenty of progress in there. If it doesn’t come by, the share worth may take successful.

I’m fairly optimistic about Greggs’ prospects. It’s a excessive avenue fixture now. It survived pandemic lockdowns and has thrived through the cost-of-living disaster. As a purveyor of low-cost treats, it might need benefited as buyers traded down.

The shares may do even higher when folks have a bit additional cash to spend. Though there’s a hazard they might commerce as much as one thing pricier as an alternative.

It additionally pays dividends

Greggs isn’t nearly progress. It pays dividends too. Whereas the yield is simply 2.21% the board has labored exhausting to reward shareholders after being compelled to drop shareholder payouts through the pandemic. Right here’s what the charts say.

Chart by TradingView

The board elevated the 2023 dividend by 5% from 59p to 62p per shares, and paid a particular dividend of 40p on high. It may simply afford that, with web money from working actions after lease funds up 29% to £257m.

But I don’t assume it’s the correct time for me to purchase Greggs as we speak. That top valuation appears to recommend that its shares have gone so far as they’ll for now. They’ve been idling since full-year outcomes have been printed in March. Traders could have gotten just a little bit too carried away.

There’s additionally the underlying threat that every one these messages about wholesome consuming and processed meals lastly get by. Greggs’ ironic cult standing could now be priced into its valuation. However what if buyers resolve the joke isn’t humorous anymore? I wouldn’t need to be holding the shares if tastes change, and gained’t purchase it. I can discover higher worth on the FTSE 250 as we speak.


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