I asked ChatGPT to tell me what UK stock could be the next Greggs

There’s plenty of doom and gloom to go around in 21st century Great Britain, but one of the undoubted success stories has been that of Greggs (LSE: GRGG). From humble beginnings as a pokey bakery in Newcastle, the chain has expanded to over 2,600 locations across the country. Hungry Brits can’t get enough of the reasonably priced sausage rolls and baked delicacies. It’s got to the point where the young ‘uns have started wearing clothing adorned with the iconic yellow and blue logo. Greggs shares haven’t been left out of the fun either, as they’re up about 780% times in value since the year 2000. 

What’s next?

Large language models like ChatGPT hadn’t been invented at the turn of the century, but could their electronic intelligence have predicted such a rise? Sadly, I’ll never find out.

But the next best thing might be to see whether it can pick out one of the smaller firms on the London Stock Exchange today that will follow in Greggs’ footsteps over the next few years. And as 25 years is more or less when I expect to retire, I wouldn’t mind owning a few stocks that go up around nine times in value until then. 

Here is what I asked:

“What stock on the London Stock Exchange could be the next Greggs?

Criteria:

– Listed on the London Stock Exchange

– Small with potential to grow like Greggs has done in 21st century (the shares up around 10 times)

– Possibility of being a well-loved name, company and brand

– Chance of doing a clothing collaboration with Primark (optional)”

The results

ChatGPT fired back with a list of five names that could fit the bill. I’ll include the following table as it seemed wrong not to share the chatbot’s eagerness to meet my joke criterion about Primark.

Overall, I’d say the list was quite impressive. When recommending stock picks, language models often serve up easy, obvious answers. This list though does give me some food for thought (pun sort of intended) – with the exception of With Nothing Underneath, which is not listed on any stock exchange.

The name that intrigues me most is drinks mixer producer Fevertree, a brand I know as well as anyone who goes anywhere these days that has a gin menu. While I’m somewhat crestfallen at the low potential for a Primark collab, the stock ticks many of the other boxes I am looking for. 

A buy?

With all its products manufactured in Somerset, Fevertree matches the profile of a ‘British success story’. After IPOing in 2014 and fuelled by a recent gin craze, the shares flew up over 20 times and the market cap surged past £1bn. 

All good stuff, but have I missed the boat here? The shares have struggled since, down 72% from their all-time high, notably suffering from rising energy costs that have made producing glass much more expensive. With Fevertree’s premium branding requiring glass bottles for its mixers, this increased supply cost is not an easy one to fix. 

Changing consumption habits are a further cause for concern. Gen Z are well known to be drinking less which takes the shine off the long-term outlook for the shares. All in all, an intriguing suggestion, ChatGPT, but not one I feel is right for me.