How Health Conscious Customers Can Make You Rich
Himanshu is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
The growing popularity of organic food industry begets huge growth opportunities for the industry players. Consumers’ increased preference towards healthier options has led many industry players to offer more varieties of healthy food. For example, General Mills (NYSE: GIS) has expanded its yogurt offering by acquiring Yoplait’s yogurt business. It plans to bring new flavors to the segment given customers’ enthusiasm for the product.
Well, General Mills is not alone here. There are many others who have been trying their hands at this industry segment. However, there are some established players who have been enjoying the benefits of customers’ health consciousness. One of them is United Natural Foods (NASDAQ: UNFI), which has been a shining star in the industry.
With a 50% year-to-date appreciation, the company is making its presence stronger with each passing quarter. It recently, reported its fourth quarter results which met The Streets’ expectations, affirming the growing demands for its products.
A Snapshot of the Quarter
Revenue grew 16% to $1.34 billion driven by increased demand for organic food as customers decided to spend more on healthy food. The company’s efficiency in operations and well managed costs drove its earnings to 51 cents per share, a jump of 18.6% over last year.
In fact, United Natural Foods intends to attain more efficiency by consolidating its four distribution centers into one. The new centralized distribution center will supply to a large number of retailers in the United States with lower operational costs at the same time.
We can expect a boost to the bottom line with the implementation of the strategy. The organic food retailer has also adopted a new transportation system in order to improve its supply chain and logistics, the benefit of which can be expected soon.
Other Industry Players
The organic food industry has been doing well from quite some time now and given the fact that it has limited players in the market the existing ones have been able to fill investors’ pockets remarkably.
Whole Foods Market (NASDAQ: WFM) is one of the retailers to which United Natural distributes its products. Growing attractiveness of its organic products has been incremental to its performance, which has enabled Whole Foods to give 40% return to its investors since the beginning of the year.
The Hain Celestial Group (NASDAQ: HAIN), a leading player in the organic and natural foods industry, has performed even better with a whopping 85% increase in its stock price since the beginning of the year. With a wide presence all over the world, the company offers all kinds of organic products under different brand names and is a customer favorite.
Customers growing dislike for processed food has led to a commendable growth in this industry segment luring others to get into the competition. A new player, Annie's (NYSE: BNNY), made its debut in March. It offers wide range of products which are made of natural ingredients including macaroni, cheese and other snack items. It has been 5 months since it went public and has still managed an amazing return of 30% for its investors.
The Bottom Line
The extraordinary performance of each industry player is an indication of a growing industry. If we look at United Natural Foods the belief is made stronger with its headstrong performance each time. Moreover, the company is trying to attain efficiencies in order to cut down on its costs and expand its bottom line further. Also, its bright outlook gives a lot of reason for investors to go long on the stock. I think this company is worthy of enhancing your portfolio in the long run.
Dig Deeper
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 brand new premium report on the company, The Motley
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justhimanshu has no positions in the stocks mentioned above. The Motley Fool owns shares of The Hain Celestial Group and Whole Foods Market. Motley Fool newsletter services recommend The Hain Celestial Group and Whole Foods Market. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.If you have questions about this post or the Fool’s blog network, click here for information.
