3. Sprouts Farmers Market Inc. (NASDAQ:SFM)
Number of Hedge Fund Holders: 37
Sprouts Farmers Market Inc. (NASDAQ:SFM) is a prominent specialty retailer in the US, focusing on fresh, natural, and organic foods. With over 430 stores across 24 states, the company is known for offering a variety of healthy products, including organic, plant-based, and gluten-free options. Sprouts Farmers Market Inc. (NASDAQ:SFM) is one of the best organic food stocks to invest in.
In the third quarter of 2024, the company reported impressive financial results, with net sales reaching $1.9 billion, marking a 14% increase from the same period in 2023. A significant highlight for Sprouts Farmers Market Inc. (NASDAQ:SFM) is its focus on organic produce. Organic items now account for over 46% of total produce sales, reflecting a growing consumer preference for healthier options. This shift has helped Sprouts Farmers Market Inc. (NASDAQ:SFM) differentiate itself in a competitive market.
The company also opened nine new stores during the third quarter, contributing to its expansion plans, which include nearly 110 approved new stores in the pipeline. For 2024, Sprouts Farmers Market Inc. (NASDAQ:SFM) now expects to open a total of 33 new stores, a slight adjustment from its previous guidance of 35. This change is primarily due to the effects of Hurricane Milton, and the company has chosen to postpone the opening of two stores in Florida until the first quarter of 2025.
E-commerce sales have also surged by 36%, representing 14.5% of total sales for the third quarter. This growth indicates that Sprouts Farmers Market Inc. (NASDAQ:SFM) is effectively meeting the increasing demand for online shopping options among health-conscious consumers. With its strategic focus on organic products, robust sales growth, and commitment to expanding its store footprint, Sprouts Farmers Market Inc. (NASDAQ:SFM) presents an attractive investment opportunity in the organic food sector.
As of the third quarter of 2024, SFM was held by 37 hedge funds, according to Insider Monkey’s database. First Pacific Advisors stated the following regarding Sprouts Farmers Market Inc. (NASDAQ:SFM) in its “FPA Queens Road Small Cap Value Fund” third quarter 2024 investor letter:
“Sprouts Farmers Market Inc. (NASDAQ:SFM) is a grocer focusing on fresh, natural and organic products. The company has best in class margins, attractive returns on capital, great new store economics, and is accelerating unit growth from 12 stores a year to 35 stores in 2024 on a base of roughly 400 stores. Over the past year, the stock has performed well after reporting strong operating results and from a low initial valuation. The stock price jumped when the company reported 2023 Q4 results and gave strong 2024 guidance. The share price jumped again when they reported 2024 Q2 numbers. We have largely maintained our position and allowed it to appreciate, only beginning to trim in 2024 Q3. Although SFM’s share price has increased faster than bottom-line results, we believe SFM still trades in the “range of reasonableness” for a high-quality, non-cyclical franchise that can reinvest capital at attractive rates of return.”
