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Don't Eat Up Safeway Shares Just Yet


There could be some upside, but competition is fierce.

Man, the weekend just goes too fast doesn't it? I was able to get some more Christmas shopping in, which was good, and I got to sleep in which was a plus too. But the highlight was dinner and a movie out with my wife.

Asian stocks were mixed overnight. The Hang Seng was up 0.84%, while the Nikkei ended down 0.02%. However, European stocks were in positive territory early this morning. And here in the US we're currently trading higher.

Here's what I'm focused on this fine Monday morning:

Safeway (SWY):
How bout those apples, huh?

There was some chatter late last Friday about how the grocer is bumping up its share repurchase plan.

My two cents:

1. Clearly there are plenty of things publicly traded companies, particularly these days, can do with their flash, so when I hear news like this it tends to have a similar effect as someone grabbing me by the collar. That said, it isn't the only company on the Street with a share buyback plan, so I don't want to necessarily make it into something that it isn't.

2. Overall my gut is that the shares could see some upside in 2010. But with competition from other grocers including Walmart (WMT), which has its giant hands in food too, I'm a bit nervous about jumping in. In a nutshell, this is one I'd rather cuddle up to on a dip.

United Technologies (UTX):
The Connecticut-based conglomerate painted what seems to be a pretty picture for 2010. In case you missed it, the company indicated that its looking for $4.40 to $4.65 next year, and that's pretty much right smack in line with the $4.56 the Street is looking for. Its chief executive also recently had some positive things to say about its dividend.

Some thoughts:

1. I'd like to think that there could actually be a little upside to the 2010 outlook that management offered up. The fact that it's beat out expectations in the last three of four quarters leaves me on the optimistic side.

2. Also, while I don't generally chase dividends, its CEO's comment about potentially keeping the bump up trend going sure seems like a good sign. By the way, as an aside, goosing the dividend isn't something boards do without some good amount of consideration and usually debate.

3. All that said, I think I'm not seeing any huge catalysts or anything like that in the very near-term. I think the company will be more of a consistent performer in 2010 and beyond.

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No positions in stocks mentioned.

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