Angels And Monsters
AnnaLisa is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Arsenic in the rice, pink slime, genetically modified organisms in our foods, what next? Headlines like these are manna from heaven for Whole Foods Market (NASDAQ: WFM) Headline risk is usually a negative but for an organic grocer it drives sales bigtime. Maybe you remember a few years back the scare about plastic bits in pet food. Whole Foods could barely keep organic kibble in stock.
Watching Out For You
Just last week Whole Foods became the first large retailer to certify the health and beauty products they carry are truly organic by insisting its suppliers undergo a rigorous testing by the USDA or the NSF/ANSI 305 Organic Personal Care Standard.
In another move to protect its shoppers Whole Foods has officially declared its support for California Proposition 37, an initiative that would require all foods with genetically modified ingredients to be labeled as such. The store’s private brand lines of foods are already GMO-free certified. I like to think of Whole Foods as a sort of guardian angel when it comes to the foodstuffs they purvey.
From its inception in 1978 in Austin, Texas the company has grown to a 329 store chain in the US, UK and Canada with plans to expand to 1,000. Whole Foods Market is really as close as a retailer can get to being all things to all people. The bulk grains, beans, dried fruits, and cereals can be cheaper than a ”crunchy” food co-op, but the fish, meats, and cheeses are what have earned the store its “Whole Paycheck” moniker.
Its P/E is pricey at 42.54 like some of its products but the forward P/E is 34.40 (fiscal year ending September 2013). Whole Foods is a favorite name of sustainable and responsible investors with its painstaking attention to fair trade and organic provenance as well as its labor policies of above average wages and health benefits and stock options for all its workers.
The stock hit another 52 week high of $100.27 on September 21. The stock is up 39.37% since last October. Its total debt is $19.2 million to $1.07 billion in total cash.
Maybe the yield is as tiny as one of their delicious chocolate covered espresso beans at .60% but the quarterly revenue growth at 32.10% and quarterly revenue growth at 13.60% makes up for it. Whole Foods goes ex-dividend on September 26.
A Heavenly Play
Hain Celestial is one of the more familiar brands that Whole Foods carries. The Hain Celestial Group (NASDAQ: HAIN) makes healthy foods like Earth’s Best baby foods, Celestial Seasonings, Arrowhead Mills, Terra chips and snacks, The Greek Gods yogurt, and many more as well as personal care products in total comprising 40 brands. They sell to club stores, natural-foods stores, mass market retailers, e-tailers, and supermarkets in almost 50 countries. Hain has also ventured into fresh prepared foods, such as sandwiches, appetizers, and full-plated meals to retailers, caterers, and food service providers even providing fresh healthy meals and snacks on some of Europe’s high speed trains.
Hain is down more than 10% from its 52 week high and has a P/E of 37.86 with a forward P/E of 23.05. Still, the stock is up 110.45% over 52 weeks more than 4 times the S&P 500. While I love the products, the debt is daunting with $390.58 million in total debt to $29.90 million in total cash. CEO Irwin Simon holds 905,412 shares. Carl C. Icahn’s fund is also one of the largest shareholders with over 7 million shares.
Like Whole Foods, Hain is another top social and responsible investing name with its commitment to providing GMO free products when feasible. They announced on September 13 they support mandatory GMO labeling joining Whole Foods in the campaign. They also require suppliers to sign a Social Accountability affidavit covering issues of human rights and health and environmental concerns.
Hain was way ahead on food trends such as Greek yogurt and gluten-free alternatives. It continues to make strategic acquisitions and expand their world wide reach which resulted in global sales of $1.130 billion in 2011. The company had a big breakout from its resistance between $50 and $55 in late August to over $70 on higher than average volume and has since pulled back a little but the trend has been bullish now since 2009.
The Bunny is a Monster
Annie’s Inc (NYSE: BNNY) is just a baby IPO, only six months old, but my how it’s grown. Let’s hope it can grow into that monster P/E of 103.19. While Annie’s has moved from $31.00 to a high of $48.67 it is not commanding a fraction of the shelf space in the average supermarket that Hain does and both Hain and Annie’s are now well represented in the average, non-natural food type supermarket.
Annie’s has to prove itself more before it gets that institutional hold (only 13.70%) it needs to have to be considered other than speculative. Of the three it has a huge short interest of 28.90% of the float. That said, it has no debt and the quarterly revenue and earnings growth are 19.90% and 17.60% respectively.
I like their products (their white cheddar macaroni and Goddess dressing are great) as I do all three of these names. However, this is the name I’d be most leery of, not because of any problems with the brands but just that they are still growing. Baby steps, people. Annie’s is reporting again on October 11.
It’s hard to choose between Hain and Whole Foods. Hain has pulled back and that may present an opportunity. I like both names as ethical investing choices. These stocks have had monster moves because like angels, they’re watching out for you.
leglamp 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.
