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Natural Food. A Healthy Investment.


By Natalie Pace
“Imagine a safer, healthier, economically robust world… Remember that our children and grandchildren will ask, not what our generation said, but what we did. So let us give an answer of which we can be proud.” --H.R.H. Charles, The Prince Of Wales.

Many of us have made the switch to natural food, but should you make the switch in your investments, too? Is it fiscally healthier to own Hain Celestial than Kraft Foods? It certainly has been for the last few years. As you can see in the chart below, Hain has doubled in share price over the last two years, while Kraft Foods is performing below the general marketplace.

 

Performance of Hain Celestial (symbol: HAIN)

Compared to Kraft Foods (KRFT) and the NASDAQ Composite Index
April 6, 2012-April 2, 2014

Natural/Organic Foods Stock Report Card

Company

Symbol

P/E
(Forward)

Price
4.2.14

Sales
Growth
Y over Y

Sales/
Income
B=billion
M=million

52-wk high/
52-wk low

Market Cap

Debt/
Equity Ratio

Net Profit Margin

Sunopta

STKL

19.43

$12.00

+6%

1.18 B
-8.52 M

$12.24
$6.90

798.7 M

0.59

-0.72%

United Natural Foods, Inc.

UNFI

24.00

$72.53

+14%

6.46 B
119.41 M

$79.64
$47.20

3.6 B

0.24

10.92%

 

Hain Celestial

HAIN

24.57

$94.45

+17%

1.93 B
135.53 M

$98.83
$59.25

4.71 B

0.46

7.02%

Whole Foods

WFM

27.46

$52.61

+10%

13.30 B
563 M

$65.59
$40.70

19.57 B

0.01

4.23%

Chipotle

CMG

35.63

$576.21

+21%

3.21 B
327.44 M

$622.90
$316.87

17.88 B

0.00

10.19%

Source: MoneyCentral.Msn.Com, PR NewsWire, BusinessWire & Sec.Gov.

Old School Foods Stock Report Card

Company

Symbol

P/E
(Forward)

Price
4.3.14

Sales
Growth
Y over Y

Sales/
Income
B=billion
M=million

52-wk high/
52-wk low

Market Cap

Debt/
Equity Ratio

Net Profit Margin

Conagra Foods
Yield: 3.24

CAG

12.01

$31.28

+14%

17.9 B
819.50 M

$37.28
$28.09

13.15 B

1.69

4.58%

Tyson
Yield: 0.69

TSN

12.08

$41.74

+4%

34.77 B
859.00 M

$44.24
$22.47

14.20 B

0.31

2.47%

Kraft Foods
Yield: 3.71

KRFT

14.31

$56.82

-1%

18.72 B
2.72 B

$58.76
$49.79

33.83 B

1.92

14.90%

Costco
Yield: 1.11

COST

21.08

$112.00

+6%

107.89 B
1.96 B

$126.12
$103.20

49.24 B

0.43

1.82%

Safeway
Yield: 2.12

SWY

23.68

$38.00

-15%

36.14 B
3.51 B

$40.25
$22.26

8.75 B

0.72

9.71%

Source: Money.MSN.com. Used with permission from Microsoft.
http://www.nataliepace.com/newsletters/members/1104/OrganicFoodRC.htm


There is a clear advantage to investing in natural food companies, over the legacy food companies. They are healthier (in sales growth and profit-margins) and fat-free (with far less debt), while pioneering the products of tomorrow.

United Natural Foods, Inc. (UNFI), Hain Celestial (HAIN) and Chipotle (CMG) all have double-digit sales growth and 7-10% profit margins. Tyson (TSN) and Kraft Foods have flat sales growth. Conagra’s (CAG) sales growth is better than the other old school food companies, at 14%, as is Kraft Foods’ profit margin (15%). However, both companies have high-levels of debt, more than triple the debt/equity ratios of the natural food companies.

So, how do Kraft and Conagra keep investors interested, when they are less healthy companies? Through dividends. Many brokers will keep their clients in for the dividends, without really knowing that the debt issue of Kraft Foods and Conagra may cost their client in principal investment. In that sense, the stock could be like the trans-fat cookie. Might taste good today, and give you a heart attack tomorrow. Kraft and Conagra follow my maxim, “The higher the dividend, the higher the risk.”

Investing in natural food is a win-win-win. You fuel the companies you like to purchase from, your bottom line looks more beautiful and your conscious ownership enriches our planet. Just as you don’t want to be stuck with a watch company (clock bracelets) when everyone checks the time on their cell phone, you don’t want to own antibiotic-laced meats and trans-fat snacks stock when the FDA is outlawing them. Even without the FDA actions, it’s pretty clear from the massive growth and proliferation of Whole Foods (WFM) and Chipotle, and the stock performance of Hain and United Natural Food, Inc., that natural food is the trend of tomorrow.

One important note: While sustainable investing can be very advantageous on many levels, that doesn’t mean that every socially conscious fund is equal. Recently, the “socially conscious” fund companies have loaded their products with oil, defense, old school food companies and other last century stocks. You have to know what you own in your funds – even when they are sold to you by a fund company that brands itself as socially conscious.

So, bottom line, definitely lean into the future with natural food stocks. More and more people are making the switch for their health, which is why natural food is enjoying the highest sales growth and profit margins of the industry.

About Natalie Pace
Natalie Pace is the author of the Amazon bestsellers The ABCs of Money and Put Your Money Where Your Heart Is (aka You Vs. Wall Street). Learn more at NataliePace.com.

The information presented here is based solely on the author’s views and does not express the observations or opinion of Rainbow Light.


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