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The past three years have been a roller-coaster ride for shareholders in bakery chain Greggs (LSE: GRG). Although the Greggs share price has soared since 2018, it underwent a sickening slump in 2019/20, when the shares more than halved in value. But the Newcastle upon Tyne-based business is bouncing back after a rough year. And there could be more growth to come for shareholders.
The Greggs share price soars
From mid-2018 to mid-2019 was a great time to be a Greggs shareholder. The FTSE 250 stock — listed in London since 1984 — exploded over these months. This more than doubled the value of the famed purveyor of sausage rolls, steak bakes, sandwiches, and doughnuts.
On 24 July 2018, the Geordie firm’s shares were languishing at 942p, well below their 1,355p closing peak on 31 July 2015, three years earlier. They had also fallen steeply from their early 2018 high of 1,380p on 5 Jan 2018. But then the Greggs share price went on a tear, skyrocketing to new heights. Less than a year later, on 17 July 2019, the shares hit a record closing high of 2,476p. Thus, the stock had soared more than £15 — surging 162.8% — in under a year. Wow.
Greggs goes into meltdown
Unfortunately, the peaking Greggs share price soon reversed. After garnering much media coverage following the launch of its vegan sausage roll in early 2019, the stock later collapsed. When many of its high-street outlets closed due to Covid-19 lockdowns, sales took a dive. From its 2020 closing high of 2,442p, the Greggs share price crashed to a closing low of 1,119p on 22 September. But in early November came announcements of highly effective Covid-19 vaccines. Since this welcome news, Greggs shares have barely looked back. On 10 May, they hit an all-time closing high of 2,591p, more than doubling (+131.5%%) in under eight months. Woo-hoo.
What next for Greggs?
Coming from a thrifty working-class background in the North East myself, I am a huge fan of Greggs. The FTSE 250 firm’s food-to-go range is competitively priced, filling, and widely available. Furthermore, it has a storied pedigree, dating back to 1939, when John ‘Jack’ Gregg started selling baked goods in Gosforth, Tyneside, 82 years ago. Today, Greggs employs almost 19,000 staff at 2,078 shops across the UK. From 2011 to 2019, Greggs’ annual revenues rose every year, before being pushed back to 2014 levels in Covid-ravaged 2020. No wonder the Greggs share price had done so well.
For Greggs’ great British success to continue, it needs to keep growing by expanding its sales, number of outlets, and product range. The group has plans to open almost 1,000 more shops over the next decade, taking its estate to 3,000+ stores. Also, it has rolled out at-home delivery to 800 stores, expanded its frozen products on sale at Iceland supermarkets, and is trialling concessions in Tesco supermarkets. If successful, these ventures should help to support the Greggs share price in future.
Of course, should sales growth falter or more Covid-19 variants emerge, then the Greggs share price — currently 2,573.6p — could suffer a shock. As with so much of the corporate world right now, Greggs’ fate is tied to the successful eradication of the coronavirus pandemic. But if I had Greggs’ current market value of £2.6bn at hand, I would happily buy the entire group as a recovery play. Hence, although I don’t own Greggs stock now, I’ve added it to my buy watchlist. Haway the Greggs!
The post The Greggs share price is up 45% in 2021. Can GRG keep rising? appeared first on The Motley Fool UK.
Cliffdarcy has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2021