24.19 +0.2 (+0.83%) Sell

Profit booking on the minds of SFM investors as it shows marginal outperformance

13 min read

SPROUTS FARMERS MARKET, INC. delivered good returns today. It grew by +0.83% to close at 24.19. It's recent 5 day performance has been -1.88%, -2.55%, +3.89%, -3.86% and +9.12%.

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SFM is currently in a down trend. Over the last three months 3 bearish signals have generated a profit of +2.63% for investors.


SFM has been underperforming the SP500 index in recent time, after having outperformed till 29 Feb, 2016. Over the last 2 years 11 months and 7 days, SFM underperformed the SP500 index on 48% days. Which indicates that on days SFM underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months SFM delivered profits on 50% days. However, it still managed to end this period in a loss. It's best return during this period (of +9.12%) was on Monday, 3 Dec, 2018. While it's worst loss in the same period (of -14.84%) was on Friday, 30 Nov, 2018. There was initially a bearish trend during this period which started on 17 Sep, 2018 and went on till 19 Sep, 2018. The trend delivered -3.5% losses to investors. This was followed by a bullish trend that started on 25 Oct, 2018 and ended on 30 Oct, 2018. This bullish trend delivered +2.51% to investors.

SFM had 6 profitable and 6 loss making months over the last year. During the last year, SFM underperformed SP500 index on monthly return basis. SFM significantly outperformed SP500 index in Aug 2018, when it returned +23.17% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. SFM had a shorter streak of profitable months than SP500 index. It only went up in 2 straight months during the last year. It is interesting to note that both SFM and SP500 index significantly outperform during months when quarterly/annual results are announced.

"You have venture capitalists. We view them as experts who also help finance your company and give directions and also some pretty candid discussions about what you have to do better.

SFM is becoming more volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in SFM's volatility from 13 Sep, 2018 to 6 Dec, 2018. While there was a significant surge in the SP500 index's volatility from 13 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that SFM has significant positive skewness in it's return distribution. This indicates that investors can expect SFM to recover from drawdowns quickly. Which makes SFM a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

SP500 index has more chance of extreme outcomes than SFM. Therefore, SP500 must receive a lower allocation than SFM in your portfolio. SFM usually has shorter drawdown period than the SP500 index.

Based on your interest in SFM you may find it interesting to know that HQY and EHC are both small caps that have shown remarkable performance and deserve to be on every investors' watchlist.

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