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Greggs (LSE: GRG) shares are all the trend. We see this on the Idiot. Buyers gobble up articles on the UK’s favorite bakery chain. Synthetic intelligence (AI) has evidently taken word of its recognition.
This morning, I requested the AI chatbot to call 2 FTSE 250 shares that look effectively positioned to surge in worth in 2025. Its first suggestion was fantasy video games producer Video games Workshop. For the reason that inventory entered the FTSE 100 in December, ChatGPT’s behind the occasions. As is commonly the case, in my expertise.
Its second choose was good previous Greggs. ChatGPT praised the group’s strong enlargement because it will increase retailer depend and put money into on-line channels.
Is that this FTSE 250 inventory previous its greatest?
There was no point out of the current slowdown in gross sales, which made me cautious. Then I found that the reply to my query was lifted from an article written in September and rather a lot’s modified since then.
Clearly, ChatGPT’s a pc programme fairly than a inventory tipster. And to be truthful it’s the primary to confess it. It’s enjoyable to play with however have to be handled with excessive warning. Proper now, I’d say the identical about investing in Greggs.
The shares had a superb run, because of a witty advertising drive that neatly positioned its sausage rolls and different pastry-based produce as an affordable deal with in difficult occasions. Naughty however good and nothing to be ashamed of.
As confidence grew, the board made formidable plans to spice up retailer depend from 2,500 to three,500, goal night openings, and pioneer retailers in railway stations, retail parks, airports and the like.
Revenues rocketed from £811m in 2021 to £1.8bn in 2023. No marvel buyers beloved it. On 9 January, we discovered they topped £2bn in 2024. However there was a catch.
Within the first half of final yr, complete like-for-like gross sales rose 13.8%. That slowed to 10.6% in Q3 and simply 7.7% in This autumn. Customers are struggling proper now, with the board blaming “extra subdued excessive avenue footfall”.
Margins are being squeezed
As we all know, the UK financial system’s having a troublesome time. Progress has just about flatlined for the reason that election, and a recession’s attainable. Even Greggs will wrestle to develop given the gloomy outlook for the excessive avenue. Finances employer’s nationwide insurance coverage and minimal wage hikes will squeeze margis.
The board’s ploughing on, with a powerful pipeline of recent store openings, whereas shuttering underperformers to maintain margins excessive. It’s additionally broadening its menu and enhancing digital capabilities, whereas engaged on its provide chain.
However analysts are forecasting gross sales development of simply 2.9% within the yr forward. If right, that will mark an additional slowdown.
On the plus facet, the shares are cheaper. Final yr, they’d a price-to-earnings ratio of greater than 22. That’s now slipped beneath 17 occasions.
Some far-sighted buyers may take into account this a possibility to purchase Greggs shares, which can get better when the financial system does. I don’t suppose we’re there but and will probably be procuring elsewhere for FTSE 250 bargains. No matter ChatGPT ‘thinks’.
