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Beacon Roofing Supply, Inc. (BECN), United Natural Foods, Inc. (UNFI): The Swiss Army Knives of the Stock Market

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Everybody loves a good growth stock. Hyper growth stocks, always the darlings of the day, seem to have everything going for them. With great revenue growth, wonderful market trends, and legions of “fanboy” analysts, what’s not to love?

But sometimes great growth dreams can turn into nightmares over night. Big name growth stocks, like Apple Inc. (NASDAQ:AAPL), are subject to enormous scrutiny. When growth slows, even a little, they can crash hard.

That’s why I’ve become bullish on the “Swiss Army Knife Stocks.” They’re the stocks that take part in large growth sectors, while avoiding the public eye. Often times, they rise with the industry growth no matter which “brand” customers prefer. Here are two great examples.

Organic Growth

By now you’ve probably noticed that healthy eating is one of the hottest growth trends in America. Perhaps you even know that organic produce, and gluten-free foods are listed amongst the top four food trends this year by eatingwell.com? Or that locally grown foods were named the top restaurant trend for 2013 according to a survey by the National Restaurant Association. Naturally when it comes to this mega trend the first stocks people think of are companies like Whole Foods Market, Inc. (NASDAQ:WFM) and Panera Bread Co (NASDAQ:PNRA) but there may be better ways to win.

United Natural Foods, Inc. (NASDAQ:UNFI)While both Whole Foods Market, Inc. (NASDAQ:WFM) and Panera Bread Co (NASDAQ:PNRA) are great companies they’re subject to fickle customer preferences. A somewhat safer way to play is through United Natural Foods, Inc. (NASDAQ:UNFI):; a distributor of organic foods to retailers. This company gets to participate in the growth of healthy eating habits but it wins no matter which grocer customers prefer.

United Natural Foods, Inc. (NASDAQ:UNFI)’s net income and profit have grown fast and earnings are expected to grow nearly 50% over the next two years. The company now has 27 distribution centers shipping over 65,000 organic products. UNFI recently reported earnings that were up 9% year over year. Still, despite the growth, the stock sold off which may present a great buying opportunity.

The big question for United Natural Foods, Inc. (NASDAQ:UNFI) is margins. The earnings are consistent, and growing, but it’s a low margin business. As long as the margins hold up, there’s very little downside with this one.

Housing gains, in any market

Beacon Roofing Supply, Inc. (NASDAQ:BECN): has been on fire. That may not surprise you considering all the good, recent, news regarding housing. Like many housing related stocks, Beacon has doubled this year. Unlike other housing names, however, Beacon didn’t have to go through hell to get to heaven.

Beacon Roofing Supply, Inc. (NASDAQ:BECN) has grown EPS by 22.95% annually over the past five years—through some truly dark days for the housing market–and its stock price has delivered a four-bagger through the past four years. During that time revenues (5%) have grown slower than earnings, which is a sign of stability.

The reason Beacon Roofing Supply, Inc. (NASDAQ:BECN) has done so well is that it can win in many ways. From 2009 to 2011 when foreclosures were the only homes being purchased, Beacon made its money from the rehabs of these fixer-uppers. Sure the company will do well as new home sales increase, but it also can make money when super storms cave in roofs. Beacon isn’t like other housing names, like Lennar Corporation (NYSE:LEN) for instance, it doesn’t need to rely on banks or the Fed. That’s a distinct advantage; the company will win whether new homes are built or not.

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