This Unknown Stock Will Profit From the Natural-Foods Craze

Americans have realized the value of organic and natural foods, and they've rewarded well-known grocery giant Whole Foods Market with huge share-price gains in recent years. But if you want to profit from trends like the natural-foods craze, you need to look beyond the obvious plays to discover other companies that are contributing to the industry's success.

One such company is United Natural Foods , which is slated to release its latest quarterly results on Tuesday. The stock has more than quadrupled since its 2009 lows, reflecting its success in capitalizing on the natural-foods trend. But will the company find new ways to grow? Let's take an early look at what's been happening with United Natural Foods over the past quarter and what we're likely to see in its quarterly report.

Stats on United Natural Foods

Analyst EPS Estimate

$0.64

Change From Year-Ago EPS

8.5%

Revenue Estimate

$1.56 billion

Change From Year-Ago Revenue

12.3%

Earnings Beats in Past 4 Quarters

1


Source: Yahoo! Finance.

Can United Natural Foods keep cashing in on the organic-food movement?
United Natural Foods has produced strong double-digit sales growth recently, and analysts expect that trend to continue this quarter as well. Expectations for earnings have fallen somewhat in recent months, with Wall Street cutting earnings estimates for the April quarter by a penny per share and full-year estimates by $0.03 per share, but those small moves haven't held back the stock. United Natural shares have risen more than 8% since the end of February.

Most people don't know much about United Natural, but as the main supplier to Whole Foods, the company commands an important place in the organic and natural foods industry. United Natural maintains a huge nationwide distribution network that delivers natural and organic foods from Hain Celestial and other major natural-foods producers to grocery stores around the country.

The major concern for United Natural is whether favorable trends in the U.S. economy can continue to give shoppers the financial means to pay higher prices for natural foods. Mainstream groceries Safeway and Kroger have fought back against Whole Foods by starting to emphasize organic and natural offerings in their own stores, representing a growth opportunity for United Natural, but their ability to continue doing so will depend on their customers being able to afford the higher prices that organic and natural food command.

Another key question for United Natural is whether food-distribution giant Sysco will enter the natural-foods space more aggressively. So far, Sysco has been content with its commanding lead over the entire industry, leaving United Natural to thrive in its niche. But if Sysco decides that the trend is worth pursuing for greater profits, it could pose a huge threat to United Natural's growth.

In United Natural's report, watch for what the company has to say as a follow-up to its February announcement cutting its expected profits for the rest of the fiscal year. With the natural-foods industry becoming more popular than ever, now's the time when the company really needs to ramp up its game if it wants to capitalize fully on the natural food trend.

It's hard to believe that a grocery store could book investors more than 30 times their initial investment, but that's just what Whole Foods has done for those who saw the organic trend coming some 20 years ago. However, it may not be too late to participate in the long-term growth of this organic foods powerhouse. In this premium report on the company, we walk through the key must-know items for every Whole Foods investor, including the main opportunities and threats facing the company. So make sure to claim your copy today by clicking here.

Click here to add United Natural Foods to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

The article This Unknown Stock Will Profit From the Natural-Foods Craze originally appeared on Fool.com.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool recommends Hain Celestial, Sysco, and Whole Foods Market and owns shares of Hain Celestial and Whole Foods Market. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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