LONDON -- One of Warren Buffett's famous investing sayings is "be fearful when others are greedy and greedy when others are fearful" -- or, in other words, sell when others are buying and buy when they're selling.
So, in this series of articles, we're going to look at what customers of The Motley Fool ShareDealing Service have been buying in the past week or so, and what might have made them decide to do so.
The share price of Greggs has slumped over 16% in the past month, primarily because of a profit warning issued at the end of April. The company said that its full-year profit would probably be lower than expected, and blamed a decline in customers visiting its stores on "adverse weather in January and March." (Poor weather in winter -- who'd have thought?)
But it's not just the past winter that's been disappointing -- the performance of Greggs' shares has hardly been inspiring over the past couple of years, and they're now 22% lower than in May 2011.
However, it seems that some people think the recent fall in the high street baker's share price might have been overdone, and that there's a profit to made from its recovery, putting Greggs in the number four spot in the latest "Top Ten Buys" list.*
They're not alone -- Greggs' chairman, Derek Netherton, bought 10,000 pounds of his company's shares at the beginning of May, and three other board members (Julie Baddeley, Iain Ferguson, and Ian Durant) invested a total of 71,000 pounds at the same time. Whilst directors' sales should be taken with a pinch of salt (there can be any number of reasons for selling, such as needing the cash to pay a tax bill, or school fees, or to get the yacht refitted), their buys are usually seen as a good indicator of confidence in the future of a company.
And Gregg's has some tricks up its apron, which it hopes will invigorate its prospects. First, it's using promotions, such as its current "breakfast deal" -- a bacon roll and any regular hot drink for 2 pounds -- to generate customers at times when its stores are usually quiet. Second, it's launching a "loyalty scheme" aimed at keeping customers coming back. And third, it's looking to open outlets in non-traditional places, such as motorway service stations. The company says 75% of new stores opened this year will be in such locations.
As well as the hope of a rally in the share price, investors might also be attracted by Greggs' yield, which currently stands at estimated 4.9% for 2013.
Five top tips
If Greggs doesn't whet your appetite, you should definitely check out the latest free Motley Fool report, "5 Shares To Retire On." This report contains five top long-term share selections from The Motley Fool's team of expert analysts.
Get hold of your FREE copy today.
*Based on aggregate data from The Motley Fool ShareDealing Service.
Copyright © 2009 The Motley Fool, LLC. All rights reserved.