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Sprouts Gains 123 Percent on First Day of Trading (SFM)

Sprouts Farmers Market (NASDAQ: SFM) more than doubled Thursday, demonstrating that the natural foods segment is alive and well.

The IPO price of $18 turned out to be only the start. By the end of the day, the stock was worth $40.11. In early trading, Friday, Wall Street shaved off a little more than a dollar, leaving the price hovering around $39. Sprouts has ambitious plans, according to The Wall Street Journal, with CEO Doug Sanders saying he plans for the company’s current 163 stores to grow by 12 percent over the next five years nearly doubling the number of locations.

Sanders said, long term, he believes the market could support 1,200 Sprouts Farmers Market stores. Sprouts’ main competitor, Whole Foods Market, Inc. (NASDAQ: WFM), indicated it was “ready to rumble.” Walter Robb, Co-CEO for Whole Foods, said in an interview, “They will have more money now and more appetite for growth, but so do we.”

Sprouts advertises itself as a “neighborhood store with feel of an old-fashioned farmer’s market.” Shoppers come in for high quality, low-priced produce and typically add higher-margin staples before checking out.

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Disclosure: At the time of this writing, the author had no position in the company mentioned.

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