Whole Foods Market Inc (NASDAQ: WFMI) is showing multiple signs it is not time to jump into this stock, yet. Comp sales are slowing while costs are increasing--a margin squeeze which could be with the company for a while.

Comparable store sales grew 6% which appears solid considering it came off a 12% increase in the prior year. However, it was below the 8% to 10% long-term goal Whole Foods has been targeting.

Private label grew 16%, which is another sign of increased competition. A&P, plus others, are coming out with some nice remodelings which can compete against Whole Foods. Also, one must remember, the organic food company sells expensive stuff, although that has not dissuaded consumers in the past.

Another sign of growth moderation is that average transactions per week increased approximately three percent to 3.4 million, and average basket size increased approximately three percent to $34.

Overall, Whole Foods is a company that can still make a lot of money for investors when its increased investment in new store opening proves fruitful. Wait for management to indicate margins have bottomed and comps are about to ramp after the new-store openings begin to show up in results.

Yesterday, I wrote a blog post called A great buy about a bullish recommendation on Whole Foods Market (NASDAQ:WFMI). The advice came from advisor Paul Tracy and was based on a long-term fundamental assessment of the company and its business outlook.

Equally bullish, but approaching the stock from a different perspective, is Bernie Schaeffer, who assesses a variety of factors such options activity, short interest, and its chart pattern.

Meanwhile, in his The Options Advisor, Bernie suggests that the "good times may be just beginning for WFMI." For those familiar with technical analysis, he points to the stock overtaking its prior resistance at the 20-week moving average, overcoming "chart congestion" at the $50 mark, and "beginning to fill in a massive bear gap forged in early November."

As a specialist in options, he also notes that the shares are now trading above "peak call open interest" in the March and May series, removing a potential options-related hurdle for WFMI.

He notes that over 7.5% of the float is sold short (a bet made by those who believe the stock will decline). He speculates, "Should the equity's turnaround efforts continue, short sellers may choose to hunt for other opportunities."

Further, he notes that the stock's accumulation is five times the stock's average daily volume. He believes that a rush to close out these positions could help to add some lift to the shares.

Reader should note that yesterday's post on WFMI specifically referred to a recommendation to buy the stock. As an options expert, Schaeffer's recommendation -- which inherently entails higher risk -- is to buy call options. Specially, he recommend the Whole Foods January 2008 with a strike price of $45.

For more stock picks from the leading financial newsletter advisors, visit Steven Halpern's free website, TheStockAdvisors.com.

As was reported by several of us here at Blogging Stocks a few weeks ago, Whole Foods Market (NASDAQ:WFMI)looks to purchase one of its largest competitors, Wild Oats (NASDAQ:OATS). This has been the speculative rumor in the niche grocery merchandising field for a few years and it finally came to pass. Whole Foods sees newly intense competition in the health food market from competitors like Trader Joe's and others. My guess -- it does not want to lose mainstream grocery customers to the likes of discount food retailers Target Corp. (NYSE:TGT) and Wal-Mart Stores, Inc. (NYSE:WMT).

In an effort to reach the increasingly health-conscious grocery consumer, both discount chains have stepped up offerings of healthy items and particularly organic grocery items. More and more consumers are discovering that many mainstream, processed foods are filled with unhealthy chemicals and they are now demanding more healthy eating options. As a result, Target in particular is stepping up its efforts to attract that consumer (more so than Wal-Mart, in my experience so far). That puts the more niche but growing retailers like Whole Foods and Wild Oats in the somewhat-cloudy crosshairs of the $52 billion Target and $380 billion Wal-Mart.

I do believe, however, that while the customer demand for more healthy foods will not only continue but rise over time, smaller (but still huge) retailers like Whole Foods and Trader Joe's will continue to attract a certain kind of shopper who almost flat-out refuses to buy groceries of any kind at mass merchants. The thing is -- Whole Foods is going to become one of those mass merchants with the Wild Oats purchase. Will that dilute the brand?

Whole Foods Market (NASDAQ:WFMI) announced on Wednesday February 21, 2007, that it intends to purchase rival organic and natural food supermarket Wild Oats -- based in Boulder, Colorado. The entire transcript of the announcement is available at the company's website (www.wholefoodsmarket.com).

Agreed, the natural and organic foods market is growing as more and more people become concerned about the harmful chemicals and lack of inspection mechanisms in our food chain. Also agreed, that Whole Foods is currently enjoying an increase in both sales and revenue. According to information released by the company as part of its 1Q 2007 earnings report, sales increased 12% to $1.9 billion. Whole Foods currently has 174 stores, the vast majority in the U.S. Average weekly store sales were up 6% to $620,000. Average number of weekly transactions increased 5% to 3.2 million. The average ticket size was up 2% to $34.43. For a full rundown on the facts and figures see the 1Q 2007 press release.

Given all the good financial news plus Whole Foods' intention to purchase Wild Oats for $565 million, investors pushed the stock up on Thursday February 22, 2007, 13.2%. Shares closed up $6.04 at $51.74. Enjoy that brief ride. S&P put Whole Foods on credit watch and may adjust the company's BBB-debt rating even lower to below investment quality unless Whole Foods can finance the purchase of Wild Oats without taking on $106 million in additional debt.

Maybe the first indication should have been when Whole Foods Market, Inc. (NASDAQ:WFMI) declined to carry Hormel Foods Corporation (NYSE:HRL)'s fresh meats products: the King of Processed Foods might have an image problem when it started taking preservatives out of its foods.

Spam® is such an icon of preserved food that it has its entire own sub-culture, with everything from spamku to Spam cookbooks. Google's Gmail serves up Spam recipes instead of ads when you click on the spam (email) folder. Hormel's blue collar customer base adores Spam and the company's other ingredient-packed products, from chili to "deli" luncheon meats. But in fact, "shelf stable" meats have declined from nearly 20% of the company's sales in 2003 to 16.3% in the year ending October 30, 2005. Now making up the majority, 54%, of the company's sales are perishable meats -- although these include everything from the higher-quality, less-processed varieties the company wishes to become known for to the old standbys, from Hormel pepperoni to Little Sizzlers sausages to Jennie-O hot dogs.

A story in the Wall Street Journal [subscription required] this morning highlights Hormel's desires to become a healthier company, which have included innovations in preservation (High Pressure Pastuerization, develped by Washington's Avure Technologies, Inc.) and a raft of new product introductions like the Natural Choice deli meats -- the ones Whole Foods wouldn't stock. The question: if Whole Foods won't take the company seriously as a provider of natural meats, will anyone else? And will the company's loyal customers stand for it?

Whole Foods Market, Inc. (NASDAQ:WFMI), the nation's largest health and organic-minded supermarket chain, has announced on Tuesday that its Board of Directors has approved a $100 million increase in its stock repurchase program, which brings the current authorization to $200 million over the next three years.

Whole Food's CEO and Chairman, John Mackey, recently stated that "In fiscal 2006, we produced very strong operating results, returned $358 million in cash dividends to our shareholders and recently announced a 20% increase in our quarterly dividend to $0.18 per share." So, with that said, and with Whole Foods apparently wanting to reduce the dilution of its outstanding shares in the next few years, the company will start buying back its common stock . The re-purchase will be based on specific timing and amounts that will vary according to market conditions and SEC limitations.

The share re-purchase program will be made using the Company's available cash resources as well as a line of credit, but as in almost all re-purchase announcements, the added stipulation that "re-purchase program may be suspended or discontinued at any time without prior notice" also comes into play -- naturally.

Shares of Whole Foods Market Inc. (NASDAQ:WFMI) tumbled more than 23% by midday in heavy trading to $46. Indications of this happening could already be seen yesterday in after-hours and this morning in pre-market trading as WFMI shares lost more than 17%.

**More recent news on Whole Foods**
Organics are bad for you, financially
Whole Foods $100 million stock buyback

Yesterday, the organic and natural foods retailer reported earnings of $39.8 billion, or 28 cent per share, a significant rise from last year's $9 million or 6 cents a share. Revenues also rose from $1.12 billion in the same period last year to $1.29 billion. Analysts were expecting $1.32 billion. Also same-stores sales rose 8.6%, but that is after a good run of double digits growth. To top it all, the company warned of slower growth in sales next year.

So despite what may sound as good growth for a retailer, it doesn't come close to the growth rate WFMI has experienced so far. It is also below what analysts had expected and worse, the outlook for 2007 is below estimates as well. This has caused analysts to warn that slowing consumer spending combined with tougher competition from mainstream grocery stores (remember even Wal-mart Stores, Inc. (NYSE:WMT) is now getting into organics) could squeeze Whole Foods. Alas, no more double-digit same-store sales figures in the foreseeable future.

Already B of A cut rating from "buy" to "neutral" and lowered the target price from $77.50 to $43. Morgan Stanley cut its price target on WFMI from $70 to $63.

If this continues, I wonder whether WFMI would cut prices enough for more people to shop there.

Futures are positive in early morning trade, pointing to a higher start for stock.

Today investors will analyze the data from the retail sector, they will look at some economic indicators for an idea about employment, inflation and productivity. Strong retail sales could help the market rally, as are the falling oil prices of this morning.

This morning, some retailers have already reported same-stores sales and the market is now looking for a 3.4% rise in October for the industry, or a 4.9% increases ex-Wal-Mart Stores, Inc. (NASDAQ:WMT). Wal-Mart said last week it is expecting a 0.5% gain in same-store sales (sales at stores that have been open at least a year). It had just reported as expected.

Already reporting sales data this morning are Costco Wholesale Corp. (NASDAQ:COST) with a 4% rise, Pier 1 Imports, Inc. (NYSE:PIR) with an over 13% decline in sales, and American Eagle Outfitters, Inc. (NASDAQ:AEOS) that reported an 8% jump in same-store sales last night. AEOS also raised third-quarter earnings guidance. The stock might still be under pressure as some were expecting a 10% rise in sales. Walgreen Co. (NYSE:WAG) Oct same-store sales rose 11.4% and J.C. Penney Co.'s (NYSE:JCP) sales rose 8.1%.

This morning, some economic data is also due out. First, weekly jobless claims will be released at 8:30, but investors are waiting the main job report tomorrow. Also at 8:30, third-quarter productivity and unit labor costs will be reported. Unit labor cost could give investors a better idea about inflation, so barring any surprises, this is the number to watch out for. Finally, at 10:00, September factory orders are due. The European Central Bank makes its decision on interest rate today.

Top news stories this morning:

According to the Wall Street Journal, Tribune Co. (NYSE:TRB) said that due to low bids, it is now prepared to sell parts of the business and will consider offers.

Unilever NV/PLC (NYSE:UN, UL) reported a third-quarter profit drop of 48% after one-time gains from asset sales. Sales rose 1.6%. The figures were at the top end of market forecasts. Unilever shares were up over 4% in Europe.

Reporting today:

• Caremark Rx Inc. (CMX) - 63 cents per share for Q3.
• CVS Corp. (CVS) - 32 cents per share for Q3.
• International Paper Co. (IP) - 43 cents per share for Q3.
• Whole Foods Market Inc. (WFMI) - 29 cents per share for Q4.

Other stories:

Electronic Data Systems Corp. (EDS) reported third-quarter after the bell yesterday with profit climbing sharply to 24 cents per share on a 9% increase in revenue of $5.29. However the company said contracts for future work declined. Analysts were expecting 20 cents per share.

Apple Computer, Inc.'s (NASDAQ:AAPL) new iPod Shuffle will arrives in stores this Friday, tomorrow.

Goldman Sachs upgraded Dell, Inc. (NASDAQ:DELL) to neutral from sell.

General Electric Co. (NYSE:GE) has signed a $300 million deal with a Chinese company to make jet engine parts for it.and French engine maker Snecma.

In the auto industry:

• New car registrations in Germany are expected to have risen in October with foreign automakers boosting their share of Europe's biggest car market to 36.1%.
• Advanced Auto Parts Inc. (NYSE:AAP) reported Q3 (ending Oct 7) net income dropped to $58.9 million, or 56 cents a share but it includes 3 cents a share in stock option expense. Revenue rose to $1.1 billion from $1 billion. Analysts expected earnings of 54 cents a share. The company also lowered Q4 guidance.

Following Baidu.com, Inc.'s (NASDAQ:BIDU) earning, yesterday I revisited rumors of Google, Inc. (NASDAQ:GOOG) or Yahoo!, Inc. (NASDAQ:YHOO) buying Baidu.

Google is releasing a new version of its mobile email today.

Yahoo is going into the food business starting a site offering thousands of recipes, advice from chefs, video cooking guides and easy-to-use Web tools to help cooks answer the daily question: What's for dinner?

Hewlett-Packard (NYSE:HPQ) will have a fourth quarter earnings call on Thursday, Nov. 16, 5:30 p.m. ET/2:30 p.m. PT here.

Wendy's (NYSE:WEN) is offering DVD movie kiosks at its restaurants.

In Pharma: Global pharmaceutical sales grew 5% in the 12 months to August in leading markets, the same rate as recorded a month earlier. Pfizer Inc's (NYSE:PFE) Lipitor cholesterol pill remained the top-selling drug with sales of $11.6 billion.

Russian oil output fell again in October partly because the country and Exxon Mobil (NYSE:XOM) holding back the start up of full-scale production due to differences.

XM Satellite Radio (NASDAQ:XMSR) and Cingular Wireless (held by AT&T (NYSE:T)) announced a partnership to stream 25 XM music channels to Cingular handsets.