If I’d invested £10k in Greggs shares two years ago here’s what I’d have today

Harvey Jones wishes he’d bought Greggs shares two years ago and wonders whether the FTSE 250 stock still offers the same value today.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Young Black woman looking concerned while in front of her laptop

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Greggs (LSE: GRG) shares have smashed it since the pandemic. I don’t hold the high street bakery chain in my portfolio, but I wish I did. Now I’m wondering if it’s the right time to buy.

The Greggs share price has soared by 47.1% in the last two years. The stock would have turned a £10,000 investment into £14,710. With dividends, the total would be closer to £15,500.

Of course, with hindsight we might all be millionaires. Lately, Greggs shares have slowed. They’re up just 2.93% over the last 12 months. Over the same period, the FTSE 250 as a whole grew 5.72%.

Investors love Greggs, judging by the traffic on our site, but there’s an issue here. Maybe they love it a little too much. 

FTSE 250 growth stock

There’s certainly a lot to like. 2023 saw “another year of rapid growth and strong progress”, in the words of CEO Roisin Currie. Total sales jumped 19.6% to £1.81bn, as Greggs expanded its network of stores beyond 3,000. It also sold more per store, with like-for-like sales up a tasty 13.7%. Pre-tax profits jumped 13% to £167.7m.

In October 2021, it announced ambitious plan to double sales within five years and it has made a strong start. If it disappoints, the backlash could be brutal, which brings me to that issue I mentioned.

The shares are a bit expensive. Trading at 22.34 times earnings they’re 70% higher than the FTSE 250 average of 13.1 times. Markets have priced a lot of growth in there. If it doesn’t come through, the share price could take a hit.

I’m pretty optimistic about Greggs’ prospects. It’s a high street fixture now. It survived pandemic lockdowns and has thrived during the cost-of-living crisis. As a purveyor of cheap treats, it might have benefited as shoppers traded down.

The shares could do even better when people have a bit more cash to spend. Although there’s a danger they could trade up to something pricier instead.

It also pays dividends

Greggs isn’t just about growth. It pays dividends too. While the yield is just 2.21% the board has worked hard to reward shareholders after being forced to drop shareholder payouts during the pandemic. Here’s what the charts say.


Chart by TradingView

The board increased the 2023 dividend by 5% from 59p to 62p per shares, and paid a special dividend of 40p on top. It could easily afford that, with net cash from operating activities after lease payments up 29% to £257m.

Yet I don’t think it’s the right time for me to buy Greggs today. That high valuation seems to suggest that its shares have gone as far as they can for now. They’ve been idling since full-year results were published in March. Investors may have got a little bit too carried away.

There’s also the underlying risk that all those messages about healthy eating and processed foods finally get through. Greggs’ ironic cult status may now be priced into its valuation. But what if shoppers decide the joke isn’t funny anymore? I wouldn’t want to be holding the shares if tastes change, and won’t buy it. I can find better value on the FTSE 250 today.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Greggs Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Man smiling and working on laptop
Investing Articles

3 FTSE 250 shares with low P/E ratios and sky-high dividend yields!

Searching for the best bargains that London has to offer? Here's a handful from the FTSE 250 I think are…

Read more »

Investing Articles

Why is Apple stock lagging the S&P 500 in 2025?

Our writer is wondering whether now might be an opportune time to snap up shares of the largest company in…

Read more »

Investing Articles

Here’s how an ISA investor could build a £20k passive income with UK shares

Looking to make a five-figure passive income in retirement? Here's how a blend of UK shares and cash savings could…

Read more »

Investing Articles

£10,000 in savings? Here’s how an investor can target £3,560 in annual passive income

Paul Summers explains how an investor could target making thousands of pounds in passive income by holding great dividend stocks…

Read more »

Young Asian man drinking coffee at home and looking at his phone
Investing Articles

Up 490%, Lion Finance Group is a new name on the FTSE 250… but what is it?

Many investors won’t be familiar with Lion Finance Group, but the FTSE 250 stock has surged 490% over five years.…

Read more »

Growth Shares

I think this is the most punished FTSE stock in the market right now

Jon Smith talks through a FTSE company that has endured problems but is one he believes has a brighter future…

Read more »

Smart young brown businesswoman working from home on a laptop
Investing Articles

Stock market correction! 1 growth share down 53% to consider buying now

This writer highlights a growth stock that has hit a rough patch in recent weeks. Here's why it might be…

Read more »

Investing Articles

Here’s why the Tesco share price has dropped 18% in a month!

Tesco's share price has lost nearly a fifth of its value since mid-February. Is this FTSE 100 dividend stock now…

Read more »