[ad_1]
A couple of years ago, investors couldn’t get enough of Greggs‘ (LSE: GRG) shares. Since then, it’s been the complete opposite. After initially tumbling in value as a result of slowing growth, the stock has continued to slip in price in 2026 so far.
Why isn’t anyone interested in buying this one-time stock market star?
Perfect storm
I don’t think the reasons are particularly deep. The FTSE 250 member’s plight is because people aren’t seeing much in the way of upside, at least in the near term.
For a humble sausage roll seller, Greggs finds itself in a pickle. The cost-of-living crisis has pushed consumers to cut back on spending, even when it comes to relatively small treats. Increased costs – such a higher National Insurance Contributions (NICs) — have played a role too. Greggs has also arguably been impacted by the surge in popularity of weight loss drugs and the ongoing fitness/health trends in younger people.
In my opinion, none of the above show any sign of going away anytime soon. Even the weather could make things difficult for Greggs going forward. Who wants to munch down on a boiling hot pasty if we have a long, hot summer?
Taking all this into account, it’s not surprising that short-sellers are showing interest in Greggs. As I type, it’s the third most ‘popular’ UK stock among those trying to make money by betting a company’s share price has further to fall. Since these people tend to be very well informed, that isn’t exactly an encouraging sign for any prospective retail investor.
Greggs’ shares: a bargain in plain sight?
Of course, short sellers can be wrong. If Greggs were to surprise the market in some way, the price could conceivably rocket as these traders rush to close their positions. Even just an indication that sales growth was stabilising might be enough.
A nice bit of director buying might have a similar effect. The valuation is certainly far from demanding right now. A price-to-earnings (P/E) ratio of 13 is significantly lower than the five-year average of 23 for this stock.
Sure, we need to be careful of placing too much weight on a single metric. But this does at least suggest that a lot of fear is already baked in. And short-term fear is just what long-term Foolish investors like me should want!
It’s also worth remembering that this company isn’t being singled out by consumers. Currently, just about every retailer with a high street presence is struggling to meet higher costs and keep the tills ringing.
Inflation’s back on the menu
Greggs has been on my watchlist ever since I sold my entire position around September 2024. I see no reason to change that. In my mind, this is still a great business trying to navigate its way through choppy waters. It’s also planning for the future by investing in new facilities and opening new stores.
Even so, I wouldn’t be surprised if the next few months prove to be difficult for CEO Roisin Currie and Co as the full economic impact of President Trump’s war with Iran becomes apparent. And this is based on the ceasefire lasting.
The next trading update on May 12 — and particularly the outlook statement — will be an absolute must-read.
The post Why aren’t people buying Greggs shares by the bucketload? appeared first on The Motley Fool UK.
Should you invest £1,000 in Greggs plc right now?
When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Greggs plc made the list?
.custom-cta-button p
margin-bottom: 0 !important;
color:#cc0000;
div.entry-footer div.textwidget div.braze-content-card div.wp-block-custom-block-collection-presentational-card
padding: 0 !important;
margin: 0 !important;
More reading
- What’s going on with the Greggs share price now?
- Greggs shares are up 90% in a decade. What could the next decade bring?
- Hereâs what £10,000 invested in Greggs shares a year agoâs worth now
- With £5,000 to invest right now, what are the top UK stocks to consider buying?
- It’s down another 13%! Analysts were dead wrong about the Greggs share price
Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Greggs Plc. 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.
[ad_2]
Source link