Friday, September 26, 2014

Health Food Stocks Can Make Your Portfolio Healthier

Do you realize that 34.9% of U.S. adults are obese according to a recent report by the U.S. Government Center for Disease Control and Prevention? That's 78.6 million people! The medical cost of obesity of Americans has been running $147 billion a year. On top of weight gain, the demand for natural food, organic food, and gluten-free food continues to increase. What's an investor to do?

Look for healthy health food stocks of course. has turned up over a dozen stocks of companies in the health food business, almost all of which generate positive earnings and a few of which pay dividends. Unfortunately, some of these companies are being scooped up, leaving fewer choices for investors.

Annie's (BNNY), which is a producer and distributor of natural and organic food, received a tender offer by General Mills (GIS) for all outstanding shares of the company at $46.00 per share. Annie's Board of Directors has accepted the offer and has recommended that the shareholders accept it.

Let's start with a company that is available to investors. Obviously, the big player in this industry is Whole Foods Market (WFM), the big health food supermarket chain. The stock trades at 25 times trailing earnings and 22 times forward earnings. Earnings for the latest quarter were up 6.3% on a 10.4% boost in revenues. The company has $796 million in cash and only $62 million in total debt. Whole Foods pays a decent yield of 1.3%.

Natural Grocers by Vitamin Cottage (NGVC) owns natural and organic grocery and dietary supplement stores. The stock has a trailing E of 31 and a trailing PE of 17. The latest quarterly earnings were up a healthy 16.6% on an 18.4% rise in sales. The stock does not pay a dividend.

United Natural Foods (UNFI) is a distributor of natural and organic foods. It trades at 24 times trailing earnings and 19 times forward earnings.

If you want to see other health food stocks along with their financials, get the free list at  Hopefully, some of these stocks will make your portfolio healthier.

Disclosure: Author did not own any of the above at the time the article was written. 


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