Dole Food Company, Inc. (DOLE) Poised for a New Era of Growth

Going bananas on organic

Greater emphasis on value-added products, such as organic produce, would also appear consistent with Dole’s future growth strategy. Notably, the company has successfully introduced organically produced bananas into the market. The US organic food market has a mother lode of opportunities, according to the RNCOS industry research, US Organic Food Market Analysis. This study noted that even during the 2010 recovery period, the industry had a 7% year-on-year gain and garnered $26.7 billion, well above the growth of total food sales. For the 2011–2015 period, research estimates a 14% growth rate for the organic food industry.

Already, there are many success stories woven into the organic food industry, one of which is Whole Foods Market, Inc. (NASDAQ:WFM). This Austin, Texas-based company maintains a chain of 311 supermarkets in the U.S., Canada, and the U.K., specializing on natural and organic foods. For its 2013 first quarter ended this January 20, Whole Foods sales rose 14% to $3.9 billion, while net income was up 24% at $146 million and EPS higher by 20% at $0.78.

The Fresh Market Inc (NASDAQ:TFM) is another specialty grocery retailer reaping rewards from the growing consumer preference for organic foods. It now has close to 120 locations across the U.S., following the opening of several Fresh Market stores since the start of this year. In its fiscal 2012 third quarter, Fresh Market net sales rose 22.1% to $321.5 million from the year-ago period, while net income saw a 19.0% year-over-year increase $10.9 million. Diluted EPS was $0.23, up 18.5% from $0.19 in the fiscal 2011 third quarter.

“Cash is king”

The rosy top line and bottom line results of these two organic food retail chains will certainly not escape notice from Dole corporate planners. Now refocused as a purely fresh commodity produce company, Dole could be on the threshold of a new era of growth that will further bring greater value to its shareholders. Following the adage that “cash is king,” the proceeds from the sale of its Asian fresh produce operations and worldwide packaged food business truly make Dole well positioned to tap more emerging growth areas in the food industry.

The article Dole Poised for a New Era of Growth originally appeared on Fool.com and is written by Arturo Cuevas.

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