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Williams-Sonoma, Inc. (WSM), Whole Foods Market, Inc. (WFM), The Fresh Market Inc (TFM): Solving Obesity One Dish at a Time

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Williams-Sonoma, Inc. (NYSE:WSM)Full disclosure: I like cooking at home. Vintage cookbooks are like food porn to me. So I may be biased toward Michael Pollan’s thesis in “Cooked” that cooking at home could help the US obesity problem.

He believes the processed and convenience foods we rely on are what’s making us fat. As he said on The Daily Show with Jon Stewart and this Yahoo! interview,” If you had to fry your own doughnuts and french fries, you’d do it much less often, right?”… later following up with a decisive,” Rates of cooking predict rates of obesity.”

In a 2009 New York Times article Pollan wrote,” Today the average American spends a mere 27 minutes a day on food preparation; that’s less than half the time that we spent cooking and cleaning up when Julia (Child) arrived on our television screens.” (Note in the link the photo of assistants crouched behind her as she cooks on The French Chef. Too funny.)

Fear of frying

Several companies could benefit if this trend gains traction. I think it should but I’m just one woman against a world of salt, fat, and sugar. Williams-Sonoma, Inc. (NYSE:WSM) would be first choice to play this trend. The cookwear retailer has been performing well of late, up 35% over the last year. It’s also a multi-channel retailer of home furnishings. It owns Williams-Sonoma, Inc. (NYSE:WSM), Pottery Barn, PB Teen, West Elm, Rejuvenation, and Mark and Graham. Twenty-five per cent of revenues come from Williams-Sonoma, Inc. (NYSE:WSM). The company just debuted a new brand, Agrarian, which expands on the theme of home-grown and homemade with gardening and preserving supplies.

Williams-Sonoma, Inc. (NYSE:WSM) benefits from both a housing recovery and a home cooking renaissance. As a stock it trades at a 20.67 P/E and has a 2.40% yield which they recently raised 41%. The company also announced a $750 million stock buyback at their earnings call in March.

For socially responsible investors, the San Francisco company has a corporate governance risk of 1 (the best) and a female CEO, Laura Alber, and two other women at the key executive level.

In its 2012 annual report the company said it had $425 million in cash after dividends and share repurchases. Diluted EPS rose 14% and net revenue hit the $4 billion mark. The stock hit another 52 week high on April 26 intraday of $53.62.

The company has global expansion ambitions, moving into Australia this year. There are already 23 franchise stores in the Middle East. As stated in the 10-K a risk from their international expansion is global exchange rates, political unrest, the same as any other global retailer. But they also source from over 52 countries, ex-USA, and it accounts for 61% of merchandise.

The company has grown at a 37.77% growth rate over the last five years but analysts expect the company to slow down to 12.86%.

The company has had a prescient knowledge of trends bringing French cookware to the US seven years before Julia Child cooked up Boeuf Burguignon on public television. One reason I’ve liked the company is that like Lululemon Athletica inc. (NASDAQ:LULU) and Apple Inc. (NASDAQ:AAPL), it offers free classes at its Williams-Sonoma, Inc. (NYSE:WSM) stores. It’s not enough to buy the cooking gear, you have to know how to use it. You really don’t want a deep fryer or pressure cooker meltdown.

Nourish your portfolio

That’s why another stock could benefit, Whole Foods Market, Inc. (NASDAQ:WFM), which also offers free cooking and nutrition classes as well as the raw ingredients to cook well at home. The whole grains and vegetables Pollan advocates are well represented at Whole Foods as well as the preservative free staples cooks should keep in their pantries. Pollan also notes that bulk food sales have risen and this is a source of strength at Whole Foods Market, Inc. (NASDAQ:WFM).

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