Greggs (LSE: GRG) is a wonderful British success story. The bakery chain has grown to become one of the UK’s biggest providers of ‘food to go’. Before it was a household name, Greggs started out from humble origins. But the group — and the Greggs share price — have grown to be a huge triumph.
The Greggs share price explodes
The Greggs story dates back 82 years to 1939, when John ‘Jack’ Gregg started selling baked goods in Gosforth, Tyneside. Today, despite staffing disruptions caused by Covid-19, Greggs employs close to 20,000 people across 2,146 shops. As a go-go growth business, Greggs increased its yearly sales every year from 2011 to 2019. But then came the coronavirus, which forced the chain to close outlets during lockdowns. As a results, sales — and the Greggs share price — slumped in 2020.
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From mid-2018 to mid-2019, the Greggs share price more than doubled, catapulting the firm up the FTSE 250 index. However, as Covid-19 went global in early 2020, the stock collapsed, more than halving in value. This would have been a wonderful opportunity to buy into the Newcastle upon Tyne-based business. On 2 November last year, the stock traded at a 52-week low of 1,201.92p. How I’d have loved to have bought into this great company at this rock-bottom price. Five days later came ‘Vaccine Monday’ (7 November 2020), when news of effective vaccines sent UK shares soaring — GRG included.
More great results from Greggs
On Tuesday, the Greggs share price closed at 3,192p, up 319p on the day. That’s a leap of a ninth (+11.1%) in a single day, following a smashing trading update from the Geordie firm. Greggs’ sales of sausage rolls, steak bakes, sandwiches, and doughnuts boomed this summer. Like-for-like sales growth in the third quarter was +3.5% on Q3 2019. Also, Greggs opened a net 68 new shops, plus 943 shops now deliver customers’ orders. The group expects to open 100 net new shops in 2021.
On 4 June, with the Greggs share price at 2,573.6p, I said, “If I had Greggs’ current market value of £2.6bn at hand, I would happily buy the entire group as a recovery play”. The Greggs share price has since leapt by almost 620p, a return of almost a quarter (+24.0%) in just four months. I’m very pleased with my call, but I think the future is bright for Greggs and its shareholders.
I’d buy Greggs today
Greggs is a great British growth story, but the group still has new chapters to write. It plans to accelerate shop openings to 150 a year, aiming for at least 3,000 shops by 2026. It will also extend evening trading to more shops, expand online and delivery options, and broaden its food and drink ranges. All this leads to an ambitious target to double turnover over five years to £2.4bn in 2026.
As a working-class lad from the North East myself, I’m proud of Greggs. I don’t own the shares today, but I’d happily buy at the current Greggs share price of 3,192p. Greggs shares are not cheap: they trade on 37.3 times earnings and offer a modest dividend yield of 0.5% a year. But £3.2bn firm Greggs seems to have strong growth baked in, which is why I’d keep buying today. Of course, I could be wrong, especially if Covid-19 makes a comeback and Greggs’ sales slump again. But, for now, it’s “Howay the Greggs” from me!