Whole Foods Market, Inc. (WFM), The Fresh Market Inc (TFM), Natural Grocers by Vitamin Cottage Inc (NGVC): What the Sprouts Farmers Market Inc (SFM) IPO Tells Investors

The Sprouts IPO could make future acquisitions easier for Whole Foods. After the IPO, Sprouts achieved a market cap of $5.4 billion. Although Sprouts still has a lower market cap than Whole Foods at $19.5 billion, the health food grocer can point to a major competitor in its sector that could help alleviate antitrust concerns. The reason that Mackey gave for selling Henry’s makes a Sprouts acquisition look unlikely, and The Fresh Market Inc (NASDAQ:TFM) and Natural Grocers by Vitamin Cottage Inc (NYSE:NGVC) would both be expensive buys, but Whole Foods might still identify a smaller acquisition candidate.

Conclusion

The Sprouts IPO could be good news for Whole Foods. Investors still hunger for health food stocks, and the secular growth trend could last for several more years. Whole Foods maintains a strong brand and a reputation that could help it fend off price competition. This health food store could still be an appealing investment.

The article What the Sprouts IPO Tells Investors About Whole Foods originally appeared on Fool.com and is written by Eric Novinson.

Eric Novinson owns shares of Whole Foods Market (NASDAQ:WFM). The Motley Fool recommends The Fresh Market and Whole Foods Market. The Motley Fool owns shares of Whole Foods Market.

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