Picture supply: Getty Photographs
Within the first month of 2025, Greggs (LSE: GRG) shares have been driving the crest of a wave. The low-cost bakery chain was quickly increasing. The discharge of recent merchandise just like the ‘vegan sausage roll’ had been making newspaper headlines. The share value had been surging on the again of the corporate’s speedy enlargement up and down the nation.
Articles overlaying Greggs shares have been a number of the most considered right here on The Motley Idiot. The inventory was one of the thrilling on the whole London Inventory Alternate and seemingly destined to affix the heavyweights on the FTSE 100.
What occurred subsequent? A reasonably massive reversal of fortunes…
Why didn’t I purchase?
Greggs‘ share value fell from 2,796p in January 2025 to 1,509p as much as Might. An investor opening a place within the early phases of final yr could be a paper lack of 46%. Yowzer!
This was no hypothetical train both. I wrote about Greggs shares quite a few instances close to the height of the hype and thought of shopping for a small stake. The expansion story seemed compelling, with a whole bunch of places opening yearly. Its area of interest of a low-cost meal supplier throughout a cost-of-living disaster seemed enticing too.
Ultimately, I opted in opposition to the acquisition. Why? The valuation performed some position – a price-to-earnings ratio within the excessive 20s in contrast unfavourably to many different British shares. You would possibly bear in mind what number of have been saying UK shares have been trying underpriced round then and the FTSE 100 did go on to have a mini bull run. The rising affect of inflation was a priority of mine too.
What subsequent?
Whereas I’m grateful that I opted in opposition to a call that may have see me lose half my stake, the state of affairs’s now considerably totally different. Greggs’ shares are 46% cheaper than they have been. May they be an excellent purchase in the present day?
The plus aspect is that Greggs continues to be rising, including over 120 new outlets in 2026 on present expectations. And a price-to-earnings ratio of 12 seems to be enticing for a stake in a rising firm. That’s half what it was in 2025 and a big low cost in comparison with many different UK shares.
However, new issues have entered the fray. Wage prices have been rising attributable to authorities coverage and inflation seems to be set to be a longer-lasting downside than first feared. The problems with informal theft have induced some shops to transform the ground plan to discourage opportunistic robbers too. All points that look prone to put a squeeze on margins.
Personally, I feel that is one I’ll nonetheless be avoiding. Merely, I feel there are higher shopping for alternatives in Britain in the mean time. I recognise there are many opportunitiers although and assume it might be one to think about for the best sort of investor.
