In this article, we will look at 10 best organic food stocks to invest in. If you want to skip our detailed analysis of the organic food industry which highlights key trends and major players, you can go directly to 5 Best Organic Food Stocks To Invest In.
The organic food industry is an emerging and rapidly growing industry in the United States and internationally. Environmental and health-related concerns are pushing the world toward making healthier life choices. Global consumer adoption of organic food products is growing as rising awareness around organic food and its health benefits are realized by consumers. According to a report by ResearchDive, the global organic food market size was valued at $168.5 billion in 2021 and is projected to reach $484 billion by 2030, growing at a compound annual growth rate of 11.7% over the forecasted period. The report found that the North American region is expected to grow the most, at a CAGR of 12.7% over the forecasted period. This is primarily due to the presence of retail giants such as Costco Wholesale Corporation (NASDAQ:COST), Walmart Inc. (NYSE:WMT), and The Kroger Co. (NYSE:KR) which are offering various organic food products on their platforms amid the rising demand of healthier food choices.
Growth Drivers For The Organic Food Industry
Mordor Intelligence cited various factors that are expected to drive the growth of the organic food industry in their Organic Food and Beverages Outlook 2021. Among prominent catalysts for the organic food industry is an increasing awareness of physical health which is pushing consumers to make healthy food choices. Organic and plant-based meat is expected to play a major role in the growth of the organic food industry. Further adding to this growth are government initiatives regarding organic food certifications to ensure food quality and safety.
Mordor Intelligence found the fastest-growing region in the organic food market to be the Asia Pacific, highlighting India and China to be major producers of organic food products. The report cited primary growth drivers for the region to be increasing consumer awareness related to the health benefits of organic food and beverages and advancements in biological farming techniques. According to the National Bureau of Statistics of China, the per capita consumption of organic fruits and vegetables came in at 105.4 kilograms in 2021. In India, the production of fruits was found to be 99.07 million metric tons and for vegetables, this number was estimated at 191.77 million metric tons in 2021.
The organic food industry is providing an attractive entry point for investors, owing to its upside potential and rapid developments. Some of the largest retailers in the world such as Costco Wholesale Corporation (NASDAQ:COST), Walmart Inc. (NYSE:WMT), and The Kroger Co. (NYSE:KR) are offering premium and high-end organic products to meet increasing consumer demands.
Photo by Kenny Eliason on Unsplash
Our Methodology
To identify the best organic food stocks to invest in, we conducted extensive research on the organic food industry and reviewed multiple industry analysis reports. We identified major players that are dominating the organic food market and reviewed their product portfolios. Along with each stock, we have mentioned the analyst and investor sentiment for it.
Let’s look at the 10 best organic food stocks to invest in.
Best Organic Food Stocks To Invest In
10. Village Super Market, Inc. (NASDAQ:VLGEA)
Number of Hedge Fund Holders: 13
Village Super Market, Inc. (NASDAQ:VLGEA) operates a chain of supermarkets in the United States. Its stores feature specialty departments, such as an on-site bakery, various natural and organic foods, ethnic and international foods, prepared foods, and pharmacies. The company operates a chain of twenty-nine ShopRite supermarkets, five Fairway Markets, and three Gourmet Garage specialty markets located in New Jersey, New York, Pennsylvania, and Maryland. Village Super Market, Inc. (NASDAQ:VLGEA) has one of the largest selections of organic food products, which is why it is ranked among the best organic food stocks to invest in.
In addition to having an impressive portfolio of organic food brands, Village Super Market, Inc. (NASDAQ:VLGEA) is also an undervalued dividend player. As of June 10, the stock has a forward yield of 4.13%, a trailing-twelve-month PE ratio of 11.99, and on top of this Village Super Market, Inc. (NASDAQ:VLGEA) has gained 5.99% over the past six months.
At the end of the first quarter of 2022, 13 hedge funds were long Village Super Market, Inc. (NASDAQ:VLGEA) with stakes worth $35.79 million. This is compared to 13 positions in the previous quarter with stakes worth $34.17 million.
In the first quarter of 2022, Jim Simons’ Renaissance Technologies raised its stakes in Village Super Market, Inc. (NASDAQ:VLGEA) by 2%, bringing them to $17.09 million. The investment covers 0.02% of the fund’s 13F portfolio, and Renaissance Technologies is the top shareholder in the company.
9. United Natural Foods, Inc. (NASDAQ:UNFI)
Number of Hedge Fund Holders: 20
United Natural Foods, Inc. (NASDAQ:UNFI) distributes natural, organic, specialty, produce, and conventional grocery and non-food products in the United States and Canada. The company operates through two primary segments: Wholesale and Retail. As of June 2022, United Natural Foods, Inc. (NASDAQ:UNFI) has a portfolio of over 5000 premium brands that cover more than 200 categories. The company is one of the largest wholesale distributors of health and specialty foods in the United States and Canada, which makes it rank among the best organic food stocks to invest in.
On June 7, United Natural Foods, Inc. (NASDAQ:UNFI) released earnings for the fiscal third quarter of 2022 in which it outperformed Wall Street expectations. The company reported earnings per share of $1.10 and beat EPS estimates by $0.12. The company reported quarterly revenue of $7.24 billion, up 9.40% year over year, and beat revenue estimates by $151.84 million. Moreover, as of June 10, the stock has a forward PE ratio of 9.25 and has surged by 21.25% over the past twelve months.
Shortly after the company’s Q3 earnings beat, MKM Partners analyst Bill Kirk raised his price target on United Natural Foods, Inc. (NASDAQ:UNFI) to $69 from $66 and reiterated a Buy rating on the shares.
Hedge funds are raising their stakes in United Natural Foods, Inc. (NASDAQ:UNFI). At the close of Q1 2022, 20 hedge funds held stakes in the company worth $115.40 million. This is compared to 21 positions in the prior quarter with stakes worth $101.56 million.
In the first quarter of 2022, Intrinsic Edge Capital raised its stakes in United Natural Foods, Inc. (NASDAQ:UNFI) by 111%, bringing them to $23.08 million, and making Intrinsic Edge Capital the most bullish hedge fund on the company.
8. Conagra Brands, Inc. (NYSE:CAG)
Number of Hedge Fund Holders: 22
Conagra Brands, Inc. (NYSE:CAG) operates as a consumer packaged goods food company in North America. The company operates through four business segments: Grocery & Snacks, Refrigerated & Frozen, International, and Foodservice. The company has a track record of over 100 years of producing excellent quality food products and has a portfolio of high-quality organic brands including Birds Eye, Healthy Choice, Blake’s, and Angie’s among premium labels, which makes Conagra Brands, Inc. (NYSE:CAG) rank among the 10 best organic food stocks to invest in now.
In addition to its premium portfolio of organic brands, Conagra Brands, Inc. (NYSE:CAG) is among the few dividend-paying stocks in the organic food and beverages industry. As of June 10, the stock has a forward dividend yield of 3.83% and a price-to-earnings ratio of 13.92, which makes it a value stock pick in the organic food industry. Conagra Brands, Inc. (NYSE:CAG) has been issuing and growing its dividends for two years now.
On March 30, UBS analyst Cody Ross initiated coverage of Conagra Brands, Inc. (NYSE:CAG) with a Neutral rating and a $34 price target. Ross noted that there is rising adoption of healthy lifestyle choices among consumers and as inflation rises, he favors companies that hold stronger pricing power over peers and invest in innovation and brand equity to drive margin expansion.
According to Insider Monkey’s database, at the close of Q1 2022, 22 hedge funds held stakes in Conagra Brands, Inc. (NYSE:CAG). The total value of these stakes came in at $479.74 million. Of these, JANA Partners was the top shareholder in the company, owning over 8.05 million shares of Conagra Brands, Inc. (NYSE:CAG) as of March 31, 2022. The fund’s stakes in the company were valued at $270.27 million.
Major retailers like Costco Wholesale Corporation (NASDAQ:COST), Walmart Inc. (NYSE:WMT), and The Kroger Co. (NYSE:KR) are adding organic food products that are manufactured and sold by Conagra Brands, Inc. (NYSE:CAG) to their offerings.
7. Sprouts Farmers Market, Inc. (NASDAQ:SFM)
Number of Hedge Fund Holders: 24
Sprouts Farmers Market, Inc. (NASDAQ:SFM) offers fresh, natural, and organic food products in the United States. As of this April, the company operates 379 stores in over 20 states across the U.S., and offers thousands of organic food products that cover dairy, frozen, produce, bakery, and meats, among other categories and make Sprouts Farmers Market, Inc. (NASDAQ:SFM) one of the best organic food stocks to invest in.
On May 5, Sprouts Farmers Market, Inc. (NASDAQ:SFM) announced earnings for the fiscal first quarter of 2022. The company reported earnings per share of $0.79 and outperformed expectations by $0.07. Sprouts Farmers Market, Inc. (NASDAQ:SFM) also generated quarterly revenue of $1.64 billion, up 4.17% year over year, missing consensus by $8.55 million. As of June 10, Sprouts Farmers Market, Inc. (NASDAQ:SFM) has a forward PE ratio of 12.13, making it an undervalued stock option to consider for investors exploring the organic food industry.
At the end of the first quarter of 2022, 24 hedge funds were bullish on Sprouts Farmers Market, Inc. (NASDAQ:SFM) with stakes worth $311.38 million. This is compared to 21 positions in the previous quarter with stakes worth $245.78 million. The hedge fund sentiment for the stock is positive.
As of March 31, Renaissance Technologies is the top shareholder in Sprouts Farmers Market, Inc. (NASDAQ:SFM). The hedge fund reportedly upped its previous stakes in the company by 3% in the first quarter of 2022, bringing them to $188.62 million. The investment covers 0.22% of Jim Simons’ 13F portfolio.
Here is what RF Capital Management had to say about Sprouts Farmers Market, Inc. (NASDAQ:SFM) in its first-quarter 2022 investor letter:
“Sprouts continues to make progress despite inflation and supply chain constraints. For the year, SFM opened 12 new stores and 2 new distribution centers. Also, SFM launched over 5,700 new products and 4 new format stores. More importantly, Q4 traffic was positive. On the other hand, sales, EPS and FCF were down compared to FY 2020. However, using 201 figures may be more useful given how COVID-19 provided a huge tailwind for SFM. If we consider 2019 sales, EPS and FCF as normalized numbers, then Sprouts is still performing well given how net sales, adjusted EPS and cash flow increased 8%, 68% and 3%, respectively, versus 2019. Guidance for 2022 was also positive.
Management has provided the following:
– Sales growth of 4%-6%
– Comp store sales growth of 0%-2%
– 15 to 20 new stores
– Flat gross margin and SG&A increase of 4%-6%
– Adjusted EBITDA of $330-$345M
– 25% effective tax rate
– Adjusted EPS of $2.14-$2.24
– CapEx of $150-$170MAdditionally, SFM is on track to achieve its 10% store growth target. The real estate team currently has 80 approved sites and more than 50 signed leases. By 2023, SFM should be closer to the 10% growth target. Overall, we believe Sprouts remains a great long-term investment. SFM continues to be one of our largest positions at 14.10%. Despite COVID-19 no longer providing a tailwind, sales, EPS and FCF continue to grow and new stores are opened every year…” (Click here to see the full text)
6. The Hain Celestial Group, Inc. (NASDAQ:HAIN)
Number of Hedge Fund Holders: 29
The Hain Celestial Group, Inc. (NASDAQ:HAIN) is a leading manufacturer and seller of organic and natural food products in the United States, United Kingdom, and internationally. The company operates through two segments: North America and International. As of June 2022, The Hain Celestial Group, Inc. (NASDAQ:HAIN) boasts a portfolio of over 40 organic brands, which makes it rank high among the best organic food stocks to invest in.
On May 5, The Hain Celestial Group, Inc. (NASDAQ:HAIN) released earnings for the fiscal third quarter of 2022. The company registered an EPS of $0.33 but missed expectations by $0.12. The company’s revenue for the quarter came in at $502.94 million, up 2.10% year over year, missing Wall Street consensus by $21.63 million.
Analysts are bullish on The Hain Celestial Group, Inc. (NASDAQ:HAIN). On May 24, CL King analyst Andrew Wolf initiated coverage of the company with a Buy rating and a $35 price target on the shares.
At the end of Q1 2022, 29 hedge funds held stakes in The Hain Celestial Group, Inc. (NASDAQ:HAIN) worth $203.94 million. This is compared to 26 hedge funds in Q4 2021 with stakes worth $377.40 million.
As of March 31, Paradice Investment Management is the leading stakeholder in The Hain Celestial Group, Inc. (NASDAQ:HAIN), owning over 1.2 million shares of the company which amounts to a stake of $42.61 million.
Similar to Costco Wholesale Corporation (NASDAQ:COST), Walmart Inc. (NYSE:WMT), and The Kroger Co. (NYSE:KR), The Hain Celestial Group, Inc. (NASDAQ:HAIN) offers a wide range of organic food products and premium brands.
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Disclose. None. 10 Best Organic Food Stocks To Invest In is originally published on Insider Monkey.
