Does Whole Foods Support All-Time Highs?

With shares of Whole Foods (NASDAQ:WFM) trading around $105, is WFM an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Whole Foods is a natural and organic foods supermarket operating in the United States, Canada, and the United Kingdom.  The company’s stores average 38,000 square feet in size and 10 years in age, and are supported by its Austin headquarters, regional offices, distribution centers, bakehouse facilities, commissary kitchens, seafood-processing facilities, meat and produce procurement centers, and a specialty coffee, tea procurement and roasting operation. Consumers worldwide are showing growing concerns about the foods they are enjoying. There is a strong movement towards organic, cruelty-free, and self-sustaining food sources. Look for Whole Foods to capitalize on this movement and see rising profits.

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T = Technicals on the Stock Chart are Strong

Whole Foods stock has seen an explosive move higher over the last few years. This move has taken the stock to all-time high prices and sees no signs of slowing. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Whole Foods is trading above its rising key averages which signal neutral to bullish price action in the near-term.


(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of Whole Foods options may help determine if investors are bullish, neutral, or bearish.

Implied Volatility (IV)

30-Day IV Percentile

90-Day IV Percentile

Whole Foods Options




What does this mean? This means that investors or traders are buying a small amount of call and put options contracts, as compared to the last 30 and 90 trading days.

Put IV Skew

Call IV Skew

June Options



July Options



As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a small amount of call and put option contracts and are leaning neutral to bullish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Increasing Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Whole Foods’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Whole Foods look like and more importantly, how did the markets like these numbers?

2013 Q1

2012 Q4

2012 Q3

2012 Q2

Earnings Growth (Y-O-Y)





Revenue Growth (Y-O-Y)





Earnings Reaction





Whole Foods has seen increasing earnings and revenue figures over the last four quarters. From these figures, the markets have been pleased with Whole Foods’s recent earnings announcements.

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P = Average Relative Performance Versus Peers and Sector

How has Whole Foods stock done relative to its peers, Kroger (NYSE:KR), Fresh Market (NASDAQ:TFM), Safeway (NYSE:SWY), and sector?

Whole Foods


Fresh Market



Year-to-Date Return






Whole Foods has been an average performer, year-to-date.


Whole Foods operates natural and organic foods supermarkets during a time where consumers are become more aware of the foods they eat. The stock has seen an explosive run over the last several years that has taken it to all-time high prices. Earnings and revenue figures have increased steadily over the last four quarters, which has kept investors upbeat. Relative to its strong peers and sector, Whole Foods has been an average performer. Look for Whole Foods to OUTPERFORM.

Using a solid investing framework such as this can help improve your stock-picking skills. Don’t waste another minute — click here and get our CHEAT SHEET stock picks now.