unimpressedpragmatist

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  • Safeway: A Safe Way to Invest
    There is a general warning out that analysts are pumping their bottom of the barrel stocks in an effort to generate commissions for their brokerages on losers. This article is a prime example of why that warring was issued.

    Since June, Safeway has been on a toboggan ride to the bottom of the hill. As to crowded stores, I know in the very large market place of the San Francisco Bay Area, the SW stores are, mostly, empty of shoppers more than they are crowded.

    Last Friday, SWY dropped 4% in the market. Morgan Stanley downgraded Safeway shares to "Underweight"... from "Equal-weight&quo... and set a price target of $22, saying the company is stuck with an upscale strategy in a trade-down economy. Since the beginning of the year, SWY has dropped its stock price, nearly, 24%!

    To compound their problems, many Safeway stores are competing in COSTCO dominated areas. Under normal conditions, that’s a no-win situation. In a recession, it’s a sure loser!

    Safeway went overboard on an unnecessary and recklessly expensive rehab of their stores (measured in $ billions) over the last several years. Then, to recapture this expense, they raised their, already, high prices even higher. The same products are available, elsewhere in the neighborhood, for a lot less money. Ergo, no shoppers are present in the Safeway stores. Look for a loss in the 3rd qtr. and a bigger one in quarter 4.

    Don’t let agenda driven analysts influence your stock decisions. And, if you currently hold SWY, dump it before it goes, even, lower (see the Morgan Stanley evaluation, above).
    Sep 07 15:08 pm |Rating: 0 0 |Link to Comment |View article

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