Shares in supermarket chain Safeway (NYSE:SWY) dropped 7% yesterday setting up investors with an interesting investment opportunity. The stock is off more than 25% from its' 52-week high. Investors were spooked about a slowdown in same store sales. I think investors need to take a second look at the company.
With an economic slowdown, many consumers will turn to home made food as opposed to eating out. This will be a big benefit to the supermarket. Another catalyst for the stock is that, unlike other food retailers like restaurants, they are able to pass on rising costs to the consumer. This will help keep their bottom line from dropping.
At these levels for investors looking for an inflation protected portfolio, you may want to take a look at Safeway.
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no positions in any stock mentioned as of 2/22/08.











Reader Comments (Page 1 of 1)
2-22-2008 @ 8:00PM
carol said...
I love safeway, but they are stagnant. The comments about cooking in are valid-- but we'll go to King Soopers or specialty food stores. Safeway needs to identify who they are. There is one walking distance from me- sure I run in for a crisis carton of milk. Otherwise, I shop other stores to make a meal. They need to find their niche and execute
2-22-2008 @ 11:28PM
Karen said...
I have always liked Safeway better than most other stores. The ones I frequented were always clean and the atmosphere was uncluttered. I am just as sorry to see other giants hurting, like Sears. But it's true...rather than being able to be the dependable ones that we have grown up with, now they have to find a gimmick to keep up with the competition. And really there's no competition... just lesser quality and no service to praise about.
2-23-2008 @ 2:47AM
Bill Olmsted said...
We have two Safeways in our town, and they are overpriced. Tomatoes at $5.00 per lb. is just one example. So folks here either go to Whole Foods (might as well at those prices) or shop at the discount supermarket where those very same $5.00 tomatoes go for $2.89 lb. However, Safeway is clean and offers a wide selection. But you won't see me there.
2-23-2008 @ 2:48PM
william said...
I think Safeway should change their inventory and offer only items in which you buy one "get one free". This is what they need to battle the Giants if the Food Grocery Chain. This would give them the edge.
2-23-2008 @ 8:15PM
Fred said...
Safeway treated it's customers so badly, I can't imagin anyone wanting to associate their name with the chain.
They became the masters of 30 people all waiting for one isle.......
This is truly a pooly operated company.
3-28-2008 @ 8:48PM
sfettig said...
Safeway has been a bust ever since the dot com industry blew up in the late 90's down from a high of 65 -70 down to 17 and right now sitting at 28 and change it's almost like having a savings account have been taking ut 25.00 a week since 2000 and started taking 40.00 out in the last 4 months hoping for a rally. But it will never come untill they clean house upstairs how many presidents and vice presidents does a company need these people need to get there buts back in the stores if they want to succeed and why do they need bonuses when there alrady making 6 figures.
4-03-2008 @ 10:47AM
Vicky said...
Yes, I agree. Too many chiefs taking all the money for nothing. This stock has been a disaster for too long now. Time to move on. They treat their employees like garbage too. I agree that their items are way overpriced.
4-03-2008 @ 8:07PM
Darrell said...
It is strange or is it, that last year I sent an advertising idea to Safeway and told them it would put them in a position to compete with Wal-Mart and it would cost them nothing in gross profit, yet give them a low price perception that consumers would notice. I was told by Safeway that they have an advertising company. And you wonder why they are struggling? It was free....