Dealmaker’s Diary: Why This 81-Year-Old Grocer Is Your Next Tech Play

Alpesh Patel|May 15, 2025

Sometimes the best investments hide in plain sight.

This traditional grocer has quietly become one of the most sophisticated tech operations in retail.

It’s an 81-year-old company generating $6.7 billion annually.

And it isn’t just selling organic produce – it’s running AI algorithms that would make Silicon Valley jealous.

With a CROCI of 13.8% that puts it in the elite top quartile and a Sortino ratio of 2.22, the numbers tell a compelling story.

But it’s what’s happening behind those pristine produce displays that caught my attention.

Let me show you why this “boring” grocer scored 7/10 in my proprietary algorithm and why it deserves a spot in your portfolio.

Click on the thumbnail below for all the details – including the ticker.

Transcript

Hi, friends.

Welcome to the Dealmaker Diary stock of the week.

You know what I love about investing? It’s not just the money-making part, but the education. It’s being involved with what’s going on in the world.

Sometimes Wall Street makes front-page headlines because of tariffs and such.

But there’s another side – companies I should have known about much sooner.

Take Sprouts Farmers Market (NASDAQ: SFM).

I’ve only known about them for a couple of years, yet they’ve been around since 1943.

They generated $6.7 billion in revenue last year with a $7 billion market cap.

How did I miss this for so long?

Let’s dive into the data. And as you know, I like to show you not just the stock metrics, but how companies leverage AI in ways you might not expect.

They’re using AI for:

• Inventory management and personalized customer engagement
• Tailoring shopping patterns to create personalized discounts
• Supply chain optimization for delivery schedules and minimizing stock-outs
• Dynamic pricing based on demand and competitor activity
• AI-powered sustainability initiatives to reduce carbon footprints
• Enhanced in-store experiences with smart kiosks and virtual assistants
• Store navigation systems

Things I’d never even considered, but they make perfect sense.

Now let’s look at those stellar numbers.

On my value-growth-income basis, it scores a 7 – meeting my minimum criteria.

The forecast P/E ratio is a bit expensive at 31x. You’re paying $31 for every future dollar of profit.

However, CROCI knocks it out of the park at 13.8% – putting it in the top 25% of all companies by cash return on capital invested.

The Sortino ratio of 2.22 is exceptional. High average returns with low downside risk.

Volatility is only 13% – incredibly low.

Alpha shows strong ability to outperform the markets.

All boxes ticked.

Should it pull back? This is the type of company where I’m thinking long-term buy and hold.

Even if it consolidates here, you’ve got solid reasons to own it.

If you’re looking short-term, 100% in 12 months is your absolute best-case scenario – though not necessarily the most likely.

It looks slightly undervalued on a discounted cash flow basis, likely because it’s consistently generating strong cash flows.

If it fell below current levels, I’d be looking to buy more.

You’d think in a world of global tariffs, I wouldn’t be talking about fruit and vegetables.

There you go.