The last two years have been brutal for us Greggs (LSE: GRG) shares. They peaked at 3,184 points in August 2024, but are currently at just 1,620 points. That’s a 50% disaster.
Shares previously rose quickly as Greggs stores grew and sales and profits rose. However, when growth slowed down, investors saved themselves. The FTSE250 however, the stock has stabilized recently. It’s down just 3.8% over the last 12 months.
Investors are concerned about three things: slowing consumer demand, rising costs and the sustainability of growth. So is there a chance to buy here?
Can FTSE 250 shares make a comeback?
Greggs’ share price looks much better than it does at a price-to-earnings ratio of 13.2. Tip dividend rate increased to a juicy 4.25%. This creates a good platform for recovery. However, I’m still skeptical and decided to call in the AI to see if I missed something.
ChatGPT is both a brilliant technology and a bit lacking. The only thing it can’t do (and doesn’t pretend otherwise) is predict stock prices. Instead, it took random information from the Internet and transformed it into something resembling a view.
The chatbot argued that Greggs still had great scope for implementation. “More stores, especially in high-traffic locations, could enhance sales and profits if the recent stores perform well“, it was said.
Also emphasized “Greggs’ strong brand and reputation as a producer of relatively inexpensive food”arguing that it makes it defensive in a tough period for the British economy. Greggs could come back into favor when inflation will finally leisurely down, he added. In my opinion, inflation may now enhance as the war in Iran drags on.
Added ChatGPT: “If real household incomes improve and consumer confidence returns, Greggs could benefit from higher spending.”
Has this moment already passed?
Not exactly a blinding insight. I asked the bot to list some of the risks, and it suggested that warm weather could reduce demand for warm food, and highlighted the threat that weight loss drugs pose to sales. Plans to expand the Greggs shopping estate may be thwarted “market saturation and cannibalization, where new branches take over sales from existing ones”– he added. The AI removed that last bit “Times”.in case you were wondering.
ChatGPT raised a few factors worth considering, but I feel like I’ve changed a bit. Instead, I checked what was happening with human experts. 15 analysts offering one-year share price forecasts have set a consensus target of 1,701p. If true, that would mean the stock is up a modest 5.1% from here. The excitement around Greggs seems to have died down.
ChatGPT (rightly) declines to express an opinion on the future developments of the Greggs stock, but as a human being I am free to make my own suggestions. I think it’s a solid company, but it has lost its status as a cult post-vegan sausage. There is a risk that when the economy finally recovers, the brand will feel tired.
However, Greggs looks like it’s worth keeping an eye on, and I still think the stock is worth considering. I’m just not excited enough to buy it myself. I see much better opportunities to recover on the pitch FTSE100 and the FTSE 250, and sink my teeth into them instead.
Should you invest £5,000 in Greggs Plc now?
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Harvey Jones does not hold any position in the companies mentioned.
