Who’s The Next Whole Foods Market, Inc. (WFM)?

The Kroger Co. (NYSE:KR)’s lower profitability reflects the decline of traditional grocers. The grocery business is extremely cost-competitive, with many in the space resorting to substantial loss-leaders to keep store traffic numbers up. As Kroger continues to let its margin fall — and compete based on price — it will continue to become less attractive than grocers like Sprouts — which competes in the gray zone between quality and price.

Bottom line

Sprouts is a fast-growing organic grocer that benefits from the massive trend in organic eating. While its ambition to outgrow Whole Foods may be excessive, its profitable business model in a growing niche will be more than enough to put a smile on shareholders’ faces.

The article Is This Company the Next Whole Foods? originally appeared on Fool.com and is written by Ted Cooper.

Ted Cooper has no position in any stocks mentioned. The Motley Fool recommends Whole Foods Market. The Motley Fool owns shares of Whole Foods Market.

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