We recently compiled a list of the 10 Best Organic Food and Farming Stocks To Invest In. In this article, we are going to take a look at where Natural Grocers by Vitamin Cottage, Inc. (NYSE:NGVC) stands against the other organic food and farming stocks.
The Rise of Organic Food and Farming
Organic farming practices focus on using natural methods to cultivate crops, avoiding synthetic fertilizers and pesticides. This approach not only enhances the quality of food but also contributes to preserving biodiversity and maintaining healthy ecosystems. The organic food and farming sector provides economic benefits as well, creating jobs and supporting rural communities.
The global organic food and farming industry has experienced significant growth in recent years, reflecting a shift in consumer preferences towards healthier and more sustainable food options. According to a report by The Business Research Company, the global organic food market was valued at $244.82 billion in 2023. The market is expected to grow at a compound annual growth rate (CAGR) of 15.1% during 2024-2028 to reach a value of $489.75 billion by the end of the forecast period. This growth is largely driven by increasing awareness of health benefits associated with organic products and a growing concern for environmental sustainability.
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The 25th edition of the yearbook “The World of Organic Agriculture,” published by the Research Institute of Organic Agriculture (FiBL) and IFOAM – Organics International, highlights significant growth in the organic farming sector. Presented in February 2024 at the BIOFACH trade fair in Nuremberg, Germany, the report reveals that by the end of 2022, the area under organic management reached 96.4 million hectares. This marks an impressive increase of 26.6% or 20.3 million hectares compared to the previous year.
Australia continues to lead the world in organic farming area, boasting 53 million hectares, an increase of 17.3 million hectares. The report shows that organic farming area increased across all continents, reflecting a global trend towards more sustainable agricultural practices. In terms of producers, the number of organic farmers worldwide rose to 4.5 million in 2022, which is nearly a 26% increase from 2021.
Support for organic agriculture is gaining momentum globally, with many countries implementing action plans to promote organic farming practices. The number of fully implemented national regulations for organic agriculture rose to 75 in 2023, indicating a commitment to enhancing and regulating this sector.
According to the report, the global organic market reached nearly EUR 135 billion in 2022. The United States was the largest market, valued at approximately EUR 56.6 billion, followed by Germany at EUR 15.3 billion and China at EUR 12.4 billion. While some European countries saw a decline in organic sales, Canada and the US experienced growth in retail sales, with increases of 9.7% and 4.4%, respectively. These figures indicate that consumer interest in organic products is strong, particularly in North America, where health consciousness is driving demand.
Methodology
To compile our list of the 10 best organic food and farming stocks to invest in, we looked for the largest organic food and farming companies. We also reviewed our own rankings and consulted various online resources to compile a list of the best organic food and farming stocks. Next, we focused on the top 10 stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s Q3 2024 database of 900 elite hedge funds. The 10 best organic food and farming stocks to invest in are ranked in ascending order based on the number of hedge funds holding stakes in them as of Q3 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A wide aisled grocery store stocked with natural and organic groceries and dietary supplements.
Natural Grocers by Vitamin Cottage, Inc. (NYSE:NGVC)
Number of Hedge Fund Holders: 9
Natural Grocers by Vitamin Cottage, Inc. (NYSE:NGVC) is a specialty retailer focused on natural and organic groceries, dietary supplements, and body care products. The company emphasizes high-quality standards, ensuring that its products do not contain artificial colors, flavors, or preservatives. Natural Grocers by Vitamin Cottage, Inc. (NYSE:NGVC) exclusively sells USDA-certified organic produce, pasture-raised dairy products, and free-range eggs. NGVC is one of the best food stocks to buy.
In the fourth quarter of fiscal 2024, Natural Grocers by Vitamin Cottage, Inc. (NYSE:NGVC) reported a 9.3% increase year-over-year in net sales, reaching $322.7 million. Net income surged by 53.2% to $9.0 million during the same period. This growth reflects the company’s successful strategy of enhancing customer engagement and expanding its product offerings. Throughout fiscal 2024, Natural Grocers by Vitamin Cottage, Inc. (NYSE:NGVC) introduced 80 new products, contributing to its diverse inventory. The company opened four new stores during the year, bringing its total to 169 locations across 21 states. These expansions indicate a commitment to growth and increasing market presence.
In fiscal 2024, Natural Grocers by Vitamin Cottage, Inc. (NYSE:NGVC) generated $73.8 million in cash from operations while investing $38.6 million in capital expenditures, primarily for new and remodeled stores. Over the past five years, the company has achieved a remarkable 37% increase in net sales, with diluted earnings per share more than tripling during this time. During this period, Natural Grocers by Vitamin Cottage, Inc. (NYSE:NGVC) also returned $108 million to shareholders through dividends, highlighting its strong financial health and commitment to providing value to investors.
With its focus on high-quality organic products, consistent sales growth, and strategic expansion plans, Natural Grocers by Vitamin Cottage, Inc. (NYSE:NGVC) presents a compelling investment opportunity in the organic food sector.
Overall, NGVC ranks 9th on our list of the best organic food and farming stocks to invest in. While we acknowledge the potential of NGVC as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NGVC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.