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Whole Foods Market, Inc.(NASDAQ:WFM) is one of the best run companies in the world. It has very conscious management, high employee satisfaction, a simple but strong business model, good financials, and excellent growth opportunities. Led by its co-founder, John Mackey, the company has the potential to be successful around the world.

Some Factors that make Whole Foods a good long term buy:

1. Business Model:

Over the years, Whole Foods has built itself a reputation for quality products. It has also gained a base of customers that love the brand. The company prides itself on its clean image, its strong management, employee happiness, well positioned products, and low risk of competition.

Whole Foods owns and operates the largest chain of natural and organic foods supermarkets. Whole Foods offers its customers a unique shopping experience that can be described as a "cross between a restaurant, cooking school, farmer's market, and grocery store." Such value in its products has landed it the No.19 spot on Fortune Magazine's "World's Most Admired Companies" list. The company also ranked in the top ten for innovation, social responsibility, employee retention and product quality.

In addition, the company is one of the best places to work at in the U.S. For the past 15 years, the company has also made it to Fortune magazine's "100 Best Companies to Work for in America." The company grants stock options to both its full time and part time employees once they've accumulated 6,000 service hours of full time employment. "Approximately 95% of the equity awards granted under the Company's stock plan since its inception in 1992 have been granted to team members who are not executive officers."

Whole foods has positioned itself as the healthiest supermarket in the country. It has also done well to create an environment of trust and loyalty with its customers and employees. These efforts have paid off in terms of its financial success. As long as the company sticks to its business model, it should have no problems creating new customers in newer markets.

2. Management:

The company is in a unique position to leverage the knowledge and vision of its co-founder, John Mackey. Mackey has been with the company since its founding and has stuck to the founding principle of high quality. Mackey's presence will be vital as the company tries to reach its goal of opening 1,000 stores in the U.S. The company currently owns 340 stores worldwide, more than 90% of which are in the U.S.

3. Cash Reserves:

The company has a comfortable Current Ratio of 2.15. At the end of 2012, its current assets were $2.1 billion, while current liabilities were $977 million. In addition, the company has a very favorable Debt to Equity ratio of .39. This leaves a lot of breathing room for the company in the event of a financial crisis. At the end of 2012, total liabilities were $1.49 billion, while equity was $3.8 billion.

The company's liquidity and debt ratios demonstrate the safety that this company's stock carries. As long as the current ratio doesn't fall below 2, the financials should not be an obstacle in its growth story.

4. Stock Price:

The company has a PE ratio of 33, and could be considered one of the more expensive companies in the market. The high price should matter less to a long term holder of the stock. In addition, the company has barely scratched the surface in terms of its growth potential. Also, what matters more (for a long term investor) is the certainty of success that comes with holding this stock, than the possibility of very high growth.

Conclusion:

Owing to its wonderful business model, focused management, good employee relationships, and happy customers, the company is likely to be around for a long time. Long term investors would do themselves a huge favor by including this stock in their portfolio. This company has all the right ingredients that would produce sustainable returns for years.

Even though the stock is not cheap, the company has great potential for growth; it is not present in Asia and has few stores in Europe. The fundamentals are very strong and the advice to buy this stock could only change if the management veers off the current business model.

Source: Whole Foods Is A Buy!