New Plays Riding The Coattails Of Whole Foods Market's Success

| About: Whole Foods (WFM)

Consumer demand for smart eating lifestyles appears to be steadily growing as the country's attention has been shifting towards health and wellness trends. As a result, the rise of organic and dietary plays has begun to hit the market in full force. The public realm of this movement appears to be led by the success of Whole Foods Market (WFM). From the market's bottom in 2009 amidst the Great Recession, the company has witnessed its stock price soar more than 900% to the current price of $95.73 as of August 19, 2012. Yet new opportunities to take advantage of the market momentum have recently entered into play as seen in the chart below.

WFM Chart

WFM data by YCharts

Apart from Hain Celestial Group (HAIN), which manufactures and markets a range of natural and organic products, many of the new names made their public debut over the past two years. The largest of these new companies include GNC Holdings (GNC) and The Fresh Market (TFM), which carry market capitalizations of $3.81 billion and $2.90 billion respectively. GNC Holdings operates as a specialty retailer for health and wellness including a large array of vitamins and supplement products. And while not a pure natural and organic play like Whole Foods, The Fresh Market does largely cater to the same audience as a specialty retailer as it offers natural and unique gourmet products.

Organic food maker Annie's Inc. (BNNY) conducted its well-received IPO in late March 2012. The popular brand characterized by its bunny icon sold 5 million shares of its common stock at $19/share raising a total of $95 million in additional capital. The opening price of the company's shares jumped to $31.10 in an impressive leap that illustrated the high demand supporting the offering. This was backed by the close of the first day's price of $35.92, an 89% premium to the offering price. As of this last Friday, Annie's traded at $39.70 carrying a market capitalization of $678 million.

Most recently, natural and organic grocery retailer Vitamin Cottage Natural Food Markets, Inc. (NGVC) conducted its IPO to list onto the New York Stock Exchange on July 25. The company sold 7.1 million shares at $15/share, raising additional capital of $54 million. Of the sold shares, 3.5 million were sold by shareholders including those from the Isely Family Group who still the controlled the largest stake in the company following the public offering. The offering priced on the high end of its expected range and opened its first market day at $18/share, a 20% premium to the offering price. As of this last Friday, the company traded at $18.57 supporting a market capitalization of $405 million.

With these two latest IPOs showing positive support by the investment community, it's clear that Wall Street at least continues to rally behind this trend of healthy eating/living. The IPO of Annie's Inc. adds another peer to compete alongside Hain Celestial in the organic food product space. Likewise, Vitamin Cottage Natural Food Markets adds another organic grocery store chain to the public arena that is most akin to Whole Foods Market in the specialty retail space. With little sign of these healthy trends going away any time soon, investors may wish to consider adding these smaller names as they ride the coattails of the larger trend at hand.

Disclaimer: Please refer to my standard disclaimer found here.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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