We last bought Sprouts Farmers Market (SFM) in October, and sold it a month later, and it has risen to the top of our filters again, recalls David Fried, editor of The Buyback Letter, which focuses on stocks undergoing significant share repurchase programs.

Sprouts is a healthy grocery store that sells fresh, natural, and organic food products in 300 stores in 19 states in the U.S. They have the usual offerings of fresh produce, meat and seafood, deli and baked goods, packaged groceries, vitamins and supplements, bulk foods, dairy and dairy alternatives, frozen foods, beer and wine, and natural body care and household items.

Sprouts Farmers market, which has more than 28,000 employees, was founded in 2002 and is based in Phoenix, Arizona. The company, with its emphasis on health and value, is one of the fastest growing retailers in the country.

In the first half of 2018, SFM opened 16 stores, including its first location in South Carolina. By the end of 2018, Sprouts operated in 19 states, and the chain plans to open 30 stores in 2019.

In 2018 the company expanded home delivery service in its major markets through a new partnership with Instacart, which allows for same-day (within 2 hours) delivery, or delivery within the week. Earlier this month SFM launched delivery via Instacart in more than a dozen cities in the Southeast.

Sprouts has committed to a “Zero Waste” threshold by 2020, as defined by the U.S. Environmental Protection Agency. The Sprouts Food Rescue program donates unsold and edible groceries, including fresh produce, from its stores and distribution centers to food banks in all of its markets.

Local relief agencies pick up this food, which would otherwise go to waste, and distribute it to families in need. In 2017, Sprouts donated 23 million pounds of product, equivalent to 19 million meals.

Food that is not fit for human consumption is either composted or sent to cattle ranches through Sprouts’ Food Waste to Farms program.

Fiscal year 2018 results highlights were:

  1. Full-year revenue of $5.2 billion for 2018, an increase of 12% compared with $4.7 billion during 2017
  2. A 2.1% increase in comparable store sales as well as strong performance in new stores Sprouts opened last year
  3. Net earnings of $158.5 million, compared to $158 million in 2017
  4. Adjusted net income of $168 million; compared to $140 million in 2017
  5. Diluted earnings per share of $1.22; compared to $1.15 in 2017
  6. Adjusted diluted earnings per share of $1.29; compared to $1.01 in 2017

The company expects sales to grow between 9-10.5% in 2019. In addition, SFM repurchased 11.1 million common shares in fiscal 2018 for a total investment of $258 million. Shares outstanding have been reduced by 6.89% in the last 12 months.

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