Starbucks Corporation (SBUX), Whole Foods Market, Inc. (WFM): Evolution Is On

PepsiCo, Inc. (NYSE:PEP) also happens to be a stock that I bought for the Prosocial Portfolio – it’s a venerated name that has been trying for the difficult task of evolving its own business for a changing, more health-oriented consumer marketplace. No company is perfect, but the Naked Juice incident struck me as a particularly disappointing turn of events.

Such situations clearly can’t continue for Pepsi’s more natural and environmentally friendly brands to retain their credibility in an area in which consumers are incredibly attuned to authenticity. That makes it an area to keep an eye on. I may boot the stock if it ends up making more similar missteps.

Evolution is key
As it stands now, both Starbucks Corporation (NASDAQ:SBUX) and Whole Foods Market, Inc. (NASDAQ:WFM) are among my top stocks when it comes to holding for the extreme long term. Both boast smart managements that care about a lot more than traditional bottom lines. They’re both cognizant of the changing marketplace. They carry products that insert more conscience into their production.

Both stocks tend to sport higher valuations than investors feel comfortable with (although investors got wonderful deals when the market tanked around financial crisis time). Personally, I don’t necessarily anchor on stock price, and when it comes to more innovative companies, I take traditional valuation metrics with a grain of salt depending on managements’ forward visions.

If investors can get great deals on such stocks on overall market bearishness or even silly quarterly disappointments here and there, they should grab bargains. If investors are going very long, though, they may want to go ahead and buy premium stocks like these; over the very long haul, gold-standard stocks should deliver more growth than many of today’s shorter-sighted analysts would see coming.

Evolution is key to growth and even survival. Both companies fit the bill, and it should be interesting to see how their diversification strategies boost their future returns.

The article Starbucks via Whole Foods: Evolution Is On originally appeared on Fool.com and is written by Alyce Lomax.

Alyce Lomax owns shares of Starbucks and Whole Foods Market. The Motley Fool recommends PepsiCo, Starbucks, and Whole Foods Market. The Motley Fool owns shares of PepsiCo, Starbucks, and Whole Foods Market.

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