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Continued popularity of organic foods could bring glad tidings to Whole Foods Market, Inc. Such a situation could cause the natural foods grocer's stock to surge in the next three to five years, fund managers told the online edition of Barron's, according to a Reuters report.
The 142-store chain has doubled sales, to $2.7 billion, in the past five years, thanks to its high-end prepared foods, said Barron's.
Amy Croen, co-president of Geneva Capital Management in Milwaukee, said if per share earnings climb by 18 percent a year, the stock of Austin, Texas-based Whole Foods could trade at $70 in three years, according to Barron's, which noted that Geneva owns about $9.3 million shares of the company.
Jack Robinson, president of Boston-based Winslow Management, thinks the stock could double to $100 in five years, from its current level of $50, Barron's reported. Robinson also owns the stock.
Robinson thinks if Whole Foods opens 20 new stores a year, and the stores generate $1 million a week, that equals 100 new stores in five years at $5 billion in revenues -- almost three times the current revenue base, Barron's reported.
However, skeptics say Whole Foods' price-to-earnings multiple of about 30 leaves it vulnerable if its specialty products don't find mass appeal, Barron's reported. It also questions the grocer's ability to grow beyond upscale and educated markets.