Why Whole Foods Might Be a Stale Selection

Why Whole Foods Might Be a Stale Selection

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Whole Foods Market slipped a bit this morning after Goldman Sachs downgraded the natural foods retailer from "buy" to "neutral."

So what: Along with the downgrade, analyst Stephen Grambling planted a price target on Whole Foods of $57 (from $66), pretty much exactly where the stock sits now. While contrarian traders might be attracted to yesterday's big pullback -- triggered by weak sales guidance -- Grambling believes the upside remains limited given the stock's still-lofty valuation and softening top line.

Now what: Goldman lowered its 2014 EPS estimate for Whole Foods from $1.79 to $1.71 and from $2.19 to $2.03. "While we still view WFM as a secular winner with continued opportunity for store growth and margin expansion, we are lowering our comp estimate to reflect the softer top-line trajectory relative to broader industry trends," Goldman noted. "Furthermore, with shares still trading at 34X our downwardly revised but above guidance NTM EPS estimate, we believe a Neutral rating is warranted and would look for a better entry point, all else being equal." But while Whole Foods is certainly no bargain, the recent pullback might be giving Fools a chance to purchase some quality growth at a reasonable price.

More reliable ways to wealth
Dividend stocks can make you rich. It's as simple as that. While they don't garner the notoriety of high-flying growth stocks, they're also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.

The article Why Whole Foods Might Be a Stale Selection originally appeared on Fool.com.

Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool recommends Whole Foods Market. The Motley Fool owns shares of Whole Foods Market. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Originally published