NEW YORK — Shares of Ruddick Corp., parent of the Harris Teeter grocery chain, were up by nearly 5% Monday after an analyst upgraded the stock, citing macro trends that have bottomed out and the beginning of “trading up” within the store.
Karen Short, an analyst with BMO Capital Markets here, also cited conservative Wall Street estimates for Ruddick’s earnings in the current third quarter and fiscal year. In a conference call discussing the “outperform” upgrade, Short said Ruddick’s strong brand equity and financial metrics give it a profile more like Whole Foods than conventional grocery chains like Kroger or Safeway, and therefore should have a higher valuation.
With unemployment and the housing market having “bottomed out,” she added that Harris Teeter’s shoppers are “beginning to trade up modestly,” citing a recent sales flier advertising items such as wine, whole pork tenderloin, porterhouse, lobster tails, sea scallops and yellow fin tuna. “We believe this is indicative that the core Harris Teeter shopper could be trading up within the store,” Short said.
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