|
|
|
ONLINE FEATURES
Book Reviews
BW Video
Columnists
Interactive Gallery
Newsletters
Past Covers
Philanthropy
Podcasts
Special Reports
BLOGS
The Auto Beat
Byte of the Apple
Europe Insight
Eye on Asia
Getting In
Investing Insights
The New Entrepreneur
NEXT: Innovation Tools & Trends
On Media
Technology at Work
The Tech Beat
Traveler's Check
TECHNOLOGY
Product Reviews
Tech Stats
Hands On
AUTOS
Home Page
Auto Reviews
Car Care & Safety
INNOVATION
& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip FINANCE Investing: Europe Annual Reports Bloomberg BW50 SCOREBOARDS Hot Growth Companies: 2008 Mutual Funds Info Tech 100 B-SCHOOLS Undergrad Programs Rankings & Profiles |  |
JUNE 2, 2003
By David Henry Tempting at Safeway With consumer prices on the ropes, bargains abound at the grocery. The buys include Safeway (SWY ) shares, says Robert Olstein of Olstein Financial Alert Fund. He's buying stock at around 19, down from a 52-week high of 43. Its price-earnings ratio of 9 is half that of the Standard & Poor's 500-stock index. Olstein especially likes the $800 million in free cash flow Safeway expects this year. Stephen Chick of J.P. Morgan Chase, which has done investment banking for Safeway, puts the number lower, at $600 million. Still, that means Safeway's is trading at just 14 times free cash flow, lower than the 20 to 25 times of peers Kroger (KR ) and Albertson's (ABS ) Safeway stock is down because food sales slid 2.3% in the first quarter. And Wal-Mart Stores (WMT ) is expanding in Safeway's core West Coast markets. What's more, Safeway managers messed up on an acquisition and a cost-cutting plan. Neil Currie of UBS Warburg (UBS ) has a sell rating on the stock. But Olstein praises managers for admitting and correcting their mistakes. As for Wal-Mart, it can't match Safeway's convenient locations. Sales, he says, will firm with the economy. "We think it is worth $30 a share," says Olstein. Since his fund's inception in September, 1995, it returned 14.75%, annualized, vs. 7.8% for the S&P, and has beat the market every year. Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.  Gene Marcial is on vacation. Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
 Copyright 2003, Bloomberg L.P.Terms of Use | Privacy Policy |
Printer-Friendly Version
