Wal-Mart Limits Consumers' Options for Gluten-Free Foods
Tyler is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Over 1.8 million American's have celiac disease. Celiac is a disease in which chronic failure to digest food is triggered by hypersensitivity of the small intestine to gluten. As crazy as it sounds, a Mayo Clinic study recently showed that only 400,000 celiacs know they have the disease. With this said, it should also be noted that over 1.6 million people choose to eat a gluten-free diet.
Whole Foods (NASDAQ: WFM) is a store whose mission statement reads, "we seek out the finest natural and organic foods available, maintain the strictest quality standards in the industry, and have an unshakable commitment to sustainable agriculture." Although all of their foods are not gluten-free, they do present many celiacs with more options. Whole Foods shows an amazing track record of growing revenues. Every year since 2003, their revenues have increased, leaving the company with a 372% growth. Whole Foods shows a 4.3% FCF yield. Every year since 2006 their FCF has increased. With nearly a 7% increase in its stock and 157% in the past five years, look for it to continue to grow at a steady rate.
Natural Grocers by Vitamin Cottage (NYSE: NGVC) is another 'super market' that celiacs often visit. Natural Grocers was founded in 1955 as a door-to-door business in Golden, Colorado. There are no stores east of Missouri, yet there are 62 grocery stores in 13 states. Capital Expenditures increased by 25% in 2012. The company's revenues have skyrocketed in the past three years, increasing 49%. Natural Grocers' market cap is just over $428 million. The company has not been publicly traded for long, as its IPO was July 25, 2012.
Kroger (NYSE: KR) is not a natural or organic chain of grocery stores, but it does still produce many gluten free items. The company was founded in 1883 in downtown Cincinnati, but has since grown to 3,574 stores, making it the country's largest grocery store chain. Revenues in this industry seem to be steadily rising, as Kroger's have increased every year for ten years as well. In the past year alone, the stock increased over 21%. With a market cap of $14 billion, the company's FCF yield is 3.9%. Its dividend yield is 2.2%. Kroger is attempting to help meet the needs of these nearly two million people with celiac.
You can find anything at Wal-Mart (NYSE: WMT), right? Not necessarily. Sure, they provide some gluten-free foods, however that certainly isn't the company's primary focus. Wal-Mart boasts a $231 billion market cap, with revenues reaching nearly half a trillion dollars in 2012. The company's dividend yield is slightly higher, showing 2.3%. For the past three years, capital expenditures have increased. Wal-Mart's FCF yield is 6.2%.
Having two friends that are celiac and gluten-free, they have noticed the products that Wal-Mart provides are over-priced compared to Kroger or organic grocery stores. Neither friend will shop at Wal-Mart because they can't find what they want and can't afford what gluten-free foods the store does have.
The Foolish Conclusion...
Wal-Mart does have the highest FCF yield of any of the mentioned companies, meaning it is the cheapest. This should acquire interest from bargain investors. Natural Grocers and Whole Foods show much more of a willingness to provide unique foods for people with allergies such as celiac. They have grown steadily in the past, and I would expect these companies to continue growing as more knowledge, research, and people are found with celiac and other food allergens. It might prove wise for long term investors to research Natural Grocers, Kroger, and especially Whole Foods.
tlwofford has no position in any stocks mentioned. The Motley Fool recommends Whole Foods Market. The Motley Fool owns shares of 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. Is this post wrong? Click here. Think you can do better? Join us and write your own!