More … than 85% of the world’s population has moved to sustainable procurement over the past five years. As part of this, the demand for organic foods has increased, especially during the pandemic, as people have adopted healthy eating habits to maintain their physical health while living sedentary and remote lives.
Additionally, consumers are turning to organic foods amid rising cases of chemical poisoning, cancer and birth defects due to excessive use of chemical pesticides in agricultural production. Indeed, the global organic food market is expected to grow at an 14.6% CAGR over the next four years to $368.94 billion by 2026.
Given the context, here are the top organic food stocks that we believe are well positioned to capitalize on growing demand: Sprouts Farmers Market, Inc. (SFM), Natural Grocers of Vitamin Cottage, Inc. (NGVC) and Lifeway Foods, Inc. (LWAY).
Sprouts Farmers Market, Inc. (SFM)
SFM in Phoenix, Arizona iis an organic food retailer that offers fresh, natural and organic food products in the United States. The company offers products classified as perishable and non-perishable. Perishable product categories include meat, seafood, fresh produce, floral and daily products, and non-perishable product categories include frozen food, vitamins and supplements, groceries, beer and wine and natural health.
On November 22, 2021, SFM received a AAA rating in the MSCI ESG Ratings 2021 assessment. we have further refined our sustainability focus by partnering with third-party ESG advisors and performing materiality assessments to understand the issues most important to our stakeholders. …At Sprouts, we pride ourselves on the positive impact our business has on the environment, our team members and the communities we serve.
On November 3, 2021, SFM introduced a pre-order option that allowed customers to reserve meals, meats, and platters online during the holiday season. This move is expected to have boosted SFM’s sales and profit margins over the past holiday season.
SFM’s profit before income taxes increased 10.1% year-over-year to $82.90 million during its fiscal third quarter ended October 3, 2021. Its net profit grew improved 6% year over year to $63.87 million. And the company’s net EPS increased 9.8% from the prior year value of $0.56.
A consensus revenue estimate of $1.62 billion for the quarter ending March 31, 2022 represents year-over-year growth of 2.6%. The Street expects SYM’s EPS to grow 0.6% annually over the next five years. Additionally, SFM has an impressive track record of earnings surprises; it has exceeded consensus EPS estimates in each of the past four quarters.
Over the past year, the stock price has gained 35.1% to close yesterday’s trading session at $28.37.
MFS POWR Rankings reflect this promising prospect. The company has an overall rating of B, which translates to Buy in our proprietary rating system. POWR ratings rate stocks on 118 separate factors, each with its own weighting.
SFM has an A rating for quality. In category A Grocery stores / big box retailers industry, it is ranked No. 23 out of 39 stocks. To view additional POWR ratings (Growth, Value, Momentum, Stability, and Sentiment) for SFM, Click here.
Natural Grocers of Vitamin Cottage, Inc. (NGVC)
NGVC is a Based in Lakewood, Colorado organic food retailer that offers natural and organic groceries and dietary supplements in the United States. The company sells organic products, which it sources from local and organic producers. NGVC operates its retail stores under the Natural Grocers by Vitamin Cottage brand.
This month, NGVC launched a free nutrition education program, “21 Days to Better Health”, which includes in-store Nutrition Health Coaches (NHCs). The program is developed by nutrition education experts and focuses on health empowerment. Customers who attend this series in person or virtually will receive select coupons for Natural Grocers products. With a growing awareness of people’s health as part of the remote work culture, this incentive-based program is expected to strengthen NGVC’s customer reach and brand recognition.
Last month, NGVC announced the move of its Greeley, Colorado store to a renovated store in downtown Greeley. This larger store could attract more customers.
During the fourth quarter of fiscal 2021, ended September 30, NGVC’s net sales increased 3.2% from the same period in 2020 to $272.65 million. And it’s disgusting profit rose 4.7% year over year to $75.79 million. Its adjusted EBITDA increased by 30.9% compared to the same period last year to reach $17.80 million. And its revenue rose 93.3% from the previous year’s value to $7.21 million. The company’s EPS doubled from the prior year’s value to $0.32.
Analysts expect NGVC’s revenue for its fiscal year 2022 to be $1.10 billion, a year-over-year growth of 4.2%. Additionally, Rue expects the company’s EPS to grow at a CAGR of 5.1% over the next five years.
Shares of NGVC have gained 29.3% in price over the past six months and closed yesterday’s trading session at $13.90.
NGVC’s strong fundamentals are reflected in its POWR ratings. The stock has an overall A rating, which translates to a Strong Buy in our proprietary rating system. NGVC has an A rating for growth and sentiment, and a B rating for value, stability and quality. It is ranked No. 1 out of 39 stocks in the A-rated grocery/superstore sector. Click here to see an additional NGVC rating for Momentum.
Lifeway Foods, Inc. (LWAY)
LWAY produces fermented probiotic products in the United States and around the world. the Morton Grove, Ill. the company’s main product is drinkable kefir, a cultured dairy product. It also produces and markets soft cheeses, cream and other European-style products, ProBugs kefir products designed for children and other dairy products, including cup kefir and Icelandic skyr. .
Last September, LWAY introduced a new line of vegan products to its probiotics portfolio. New products include plant-based Lifeway and chocolate flavored kefir. This new product introduction is expected to boost LWAY sales as these wellness drinks are expected to experience robust growth based on a consumer trend regarding gut health.
During its third quarter of fiscal 2021, ended September 30, 2021, LWAY’s net sales increased 13.5% year-over-year to $29.55 million, marking its eighth consecutive quarter of net sales growth. Its cash flow from operating activities increased 20.3% from the same period last year to $6.44 million.
Over the past month, the stock price has gained 5.5% to close yesterday’s trading session at $5.18.
LWAY’s strong fundamentals are reflected in its POWR ratings. The company has an overall A rating, which translates to a strong buy in our proprietary rating system. LWAY has an A rating for growth and a B for quality, value, stability and sentiment. Among 49 B-rated stocks Food manufacturers industry, it is ranked #4. Click here to see the additional POWR rating for Momentum for LWAY.
Shares of SFM were trading at $28.47 per share on Friday afternoon, up $0.10 (+0.35%). Year-to-date, the SFM is down -4.08%, compared to a -7.13% rise in the benchmark S&P 500 over the same period.
About the Author: Aditi Ganguly
Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the dos and don’ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing stocks. Following…