Whole Foods Market, Inc. (WFM), United Natural Foods, Inc. (UNFI): This Unknown Stock Will Profit From the Natural-Foods Craze

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Americans have realized the value of organic and natural foods, and they’ve rewarded well-known grocery giant Whole Foods Market, Inc. (NASDAQ:WFM) with huge share-price gains in recent years. But if you want to profit from trends like the natural-foods craze, you need to look beyond the obvious plays to discover other companies that are contributing to the industry’s success.

One such company is United Natural Foods, Inc. (NASDAQ:UNFI), which is slated to release its latest quarterly results on Tuesday. The stock has more than quadrupled since its 2009 lows, reflecting its success in capitalizing on the natural-foods trend. But will the company find new ways to grow? Let’s take an early look at what’s been happening with United Natural Foods over the past quarter and what we’re likely to see in its quarterly report.

Stats on United Natural Foods

Analyst EPS Estimate $0.64
Change From Year-Ago EPS 8.5%
Revenue Estimate $1.56 billion
Change From Year-Ago Revenue 12.3%
Earnings Beats in Past 4 Quarters 1

Source: Yahoo! Finance.

Can United Natural Foods keep cashing in on the organic-food movement?
United Natural Foods, Inc. (NASDAQ:UNFI) has produced strong double-digit sales growth recently, and analysts expect that trend to continue this quarter as well. Expectations for earnings have fallen somewhat in recent months, with Wall Street cutting earnings estimates for the April quarter by a penny per share and full-year estimates by $0.03 per share, but those small moves haven’t held back the stock. United Natural shares have risen more than 8% since the end of February.

Whole Foods Market, Inc. (NASDAQ:WFM)Most people don’t know much about United Natural, but as the main supplier to Whole Foods Market, Inc. (NASDAQ:WFM), the company commands an important place in the organic and natural foods industry. United Natural Foods, Inc. (NASDAQ:UNFI)maintains a huge nationwide distribution network that delivers natural and organic foods from The Hain Celestial Group, Inc. (NASDAQ:HAIN) and other major natural-foods producers to grocery stores around the country.

The major concern for United Natural is whether favorable trends in the U.S. economy can continue to give shoppers the financial means to pay higher prices for natural foods. Mainstream groceries Safeway Inc. (NYSE:SWY) and The Kroger Co. (NYSE:KR) have fought back against Whole Foods Market, Inc. (NASDAQ:WFM) by starting to emphasize organic and natural offerings in their own stores, representing a growth opportunity for United Natural Foods, Inc. (NASDAQ:UNFI), but their ability to continue doing so will depend on their customers being able to afford the higher prices that organic and natural food command.

Another key question for United Natural is whether food-distribution giant SYSCO Corporation (NYSE:SYY) will enter the natural-foods space more aggressively. So far, Sysco has been content with its commanding lead over the entire industry, leaving United Natural Foods, Inc. (NASDAQ:UNFI) to thrive in its niche. But if Sysco decides that the trend is worth pursuing for greater profits, it could pose a huge threat to United Natural’s growth.

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