Greggs (LSE: GRG) shares have been one of many strongest performers on the FTSE 250 during the last decade. Shareholders may also be completely satisfied to see that the inventory has climbed an additional 10% this 12 months.

That beats the FTSE 250, which is up 6.2%. It has additionally outperformed the index over a five-year and 10-year interval, rising 29.6% and 451.4% in comparison with 7.7% and 30.9%.

However with its share price rising, the place does this go away potential traders? Is there room for extra development? Or has the ship sailed? Let’s discover.

Challenges forward?

After I take a look at Greggs, I see just a few points which will hinder the agency’s development.

Firstly, whereas the sausage roll maker has change into extremely standard with its good advertising and marketing over the previous couple of years, I can’t assist however really feel prefer it’s swimming in opposition to the tide in terms of long-term consuming habits.

In recent times, there’s been a big push to advertise more healthy consuming. Individuals are extra aware about what they’re placing of their our bodies than ever earlier than and the ultra-processed menu provided by Greggs doesn’t align with a wholesome way of life.

Secondly, the inventory appears costly. It trades on 20.7 occasions earnings. That’s above the FTSE 250 common of round 12. Whereas that’s forecast to fall to 18.6 occasions for 2026, that also appears overpriced to me.

A resilient enterprise

However then once more, Greggs is resilient. It has confronted challenges earlier than and overcome them. What’s to say it might probably’t hold delivering?

For instance, gross sales final 12 months rose 19% to £1.8bn regardless of a cost-of-living disaster. A buying and selling replace in Might confirmed that the enterprise had stored up this way in 2024, with like-for-like gross sales up 7.4%. Because the enterprise put it itself, it’s at present working in “challenging conditions”. Nonetheless, it appears to be coping simply high quality.

Wanting forward, Greggs has no plans to sluggish down both. It opened 64 new shops throughout the first 19 weeks of the 12 months. That takes its whole to 2,500. There’s the argument to be made that when budgets are tight, shoppers will revert to Greggs low-cost and cheerful items.

There’s additionally its tasty 2.2% dividend yield to take into accounts. That’s under the FTSE 250 common (3.2%). Nonetheless, its payout has been steadily rising, which is at all times encouraging to see. Over the past decade, the corporate has elevated its dividend by 11% a 12 months on common.

Time to purchase?

However even after weighing it up, Greggs isn’t a inventory I’ll be shopping for right this moment. We’ve seen the corporate rise from humbling beginnings to a British stalwart. Whereas that’s inspiring, the inventory appears a tad too costly for my liking.

I’m additionally involved about evolving social developments. It’s proved its resilience. Nevertheless, within the years and a long time to come back, I feel we may see a serious shift in client habits.

The FTSE 250 is dwelling to loads of thrilling companies. So, I’ll stay on the seek for my subsequent purchase. I’ve acquired just a few thrilling corporations on my radar that I’ll be exploring within the weeks to come back.