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Organic Food Stocks: Health Trends May Boost These Stocks

By: Kapitall
Posted: 7/26/2011 5:07:00 PM
Referenced Stocks: HAIN;STKL;UNFI;WFM

(List compiled by Becca Lipman)

Imagine that you are presented with two baskets of fruit. Each of equal variety, size, and ripeness. One is labeled organic, the other is not. Which one would you choose?

If you chose the organic fruit basket, you belong with the 58% of consumers who recently polled a preference to organic fruit. (Poll byThompson Reuters.) 

Now, whether you have chosen the organic basket for health, taste, or sustainability reasons, or because this hypothetical basket is free and at no discount to the conventional basket, your choice represents a movement. 

"The numbers [of people who prefer organics] are highest in the young and educated segments of the population." A segment that will grow as the populations age and start families of their own (onto which they can enforce their dietary values). 

Yet while 56% of people say they prefer organic foods, the percentage of people buying organics is much less… The obvious barriers exist: high cost, seasonal and unpredictable weather factors, and availability at the local deli or supermarket. 

But for those who are able and willing to pay top dollar for toxin-free fruits and veggies, there are a few suppliers ready to help out. To help you analyze the organic movement, we've listed all of the organic produce companies trading on the stock market.

With an increasing demand for their produce, and a growing target market, do you think these companies will see a change in profits? Use the list and data below as a starting-off point for your own analysis.

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1. The Hain Celestial Group, Inc. (HAIN): Processed & Packaged Goods Industry. Market cap of $1.42B. Current price at $32.69. The stock is a short squeeze candidate, with a short float at 5.9% (equivalent to 6.52 days of average volume). The stock has gained 56.41% over the last year.

The Hain Celestial Group is a natural, specialty and snack food company. The company is a leader in the natural food categories, with such well-known natural food brands as Celestial Seasonings teas, including Sleepytimer, Lemon Zingerr, Red Zingerr, and Tension Tamerr varieties, Hain Pure Foodsr, Earth's Bestr, and Nile Spice. The company's principal specialty product lines include Hollywoodr cooking oils, Esteer sugar-free products, Weight Watchersr dry and refrigerated products, Kineretr kosher foods, Boston Better Snacksr, and Alba Foodsr.

2. SunOpta Inc. (STKL): Processed & Packaged Goods Industry. Market cap of $426.60M. Current price at $6.5. The stock has gained 28.97% over the last year.

SunOpta Inc. is an operator of high-growth ethical businesses, focusing on integrated business models in the natural and organic food, supplements and health and beauty markets. The Company has three business units: the SunOpta Food Group, which specializes in sourcing, processing and distribution of natural and organic food products integrated from seed through packaged products; the Opta Minerals Group, a producer, distributor, and recycler of environmentally friendly industrial materials; and the SunOpta BioProcess Group which engineers and markets proprietary steam explosion technology systems for the pulp, bio-fuel and food processing industries. Each of these business units has proprietary products and services that give it a solid competitive advantage in its sector.

3. United Natural Foods, Inc. (UNFI): Food Wholesale Industry. Market cap of $2.13B. Current price at $43.98. The stock has gained 29.09% over the last year.

United Natural Foods is the leading independent national distributor of natural foods and related products in the United States. The company is the primary supplier to a majority of its customers, offering high-quality natural products consisting of groceries and general merchandise, nutritional supplements, bulk and foodservice products, personal care items, perishables and frozen foods. Relatively low correlation to the market (beta = 0.71), which may be appealing to risk averse investors. The stock is a short squeeze candidate, with a short float at 7.57% (equivalent to 15.02 days of average volume).

4. Whole Foods Market, Inc. (WFM): Grocery Stores Industry. Market cap of $11.72B. Current price at $66.72. The stock has gained 69.25% over the last year.

Whole Foods Market is the largest purveyor of natural foods in the world. They own and operate the country's largest chain of natural food supermarkets. They are like an old-fashioned neighborhood grocery store, an organic farmer's market, a European bakery, a New York deli, and a modern supermarket all rolled into one!