Organic Foods Take Hold
Mary is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Recent reports from Dean Foods (NYSE: DF) showed the dairy giant swinging to a profit in the second quarter. The company also said that it would spin off a fast-growing unit that sells organic dairy products and soy milk. Dean Foods is planning to launch an IPO for 20% of its White Wave-Alpro unit, which makes popular brands including Horizon organic milk, Silk soy almond milks, and Alpro soy foods and drinks. Dean Foods will retain the remaining 80% of the unit. This news gave Dean Foods one of the largest percentage gains that day. This move is smart as White Wave-Alpro and Dean Foods offer different products aimed at different customers. The spin off will allow the units to be managed separately following different philosophies.
Another food company that specializes in organic food is Annie’s (NYSE: BNNY). Annie’s recently reported a successful first quarter. Earnings increased 18% while sales increased 20%. Also, Annie’s only went public recently. Already the company is planning a second offering to sell down their stake in the company. They will be offering an additional 3 million shares at $39.25 per share. With one successful launch already under their wings and a second offering under way, this should be good news for other organic foods companies such as Dean Foods. These companies can be successful on a large scale instead of just being seen as a niche product without much volume potential.
The Hain Celestial Group (NASDAQ: HAIN) is also a successful organic and soy foods company. The company owns a multitude of brands with offerings in natural and organic food. Hain’s fundamentals are relatively strong and the company is enjoying growing demand for chemical and preservative free foods. The company has reported two consecutive quarters of earnings growth. But the company has not always been successful. Throughout the recession Hain Celestial did take quite a hit on sales in the U.S. However, it has since become a successful and profitable company.
The biggest risk that any of these companies face is a further slowing in the U.S. Economy. However, with health concerns currently on the rise, more and more consumers are looking for organic and soy products to stock their shelves. With Dean Foods planning to spin off a separate unit this places them in a prime position to take advantage of the organic and soy trend that is growing. Annie’s has had been successful since their inception and a second offering will bring more investors to the table. Hain Celestial has recently struggled in line with the recession, but the company is re-emerging with a strong value.
MaryPosey has no positions in the stocks mentioned above. The Motley Fool owns shares of Dean Foods Company and The Hain Celestial Group. Motley Fool newsletter services recommend The Hain Celestial Group. 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.
