Looking for a healthy investment that could deliver healthy returns? A few organic food company stocks could help satisfy your appetite for risk.
Read as we take a deep dive into the best organic food stocks to buy right now.
Best Organic Food Company Stocks To Watch
Amazon.com, Inc. (NASDAQ: AMZN)
It might surprise you that we started our list of the best organic food company stocks with an online retailer of products.
But Amazon’s acquisition of Whole Foods supermarket has helped the online conglomerate become one of the most noteworthy players in the space.
It all started back in 2017 when previous CEO and company founder Jeff Bezos stepped in to buy the company.
Whole Foods fell prey to a hostile takeover bid by investors, which founder John Mackey felt could damage the brand.
After making some calls and pulling some strings, Mackey got Bezos in on the deal and bought the brand for a whopping $13.7 billion. An investment that has paid off handsomely for Amazon.
The move has allowed the online marketplace to further expand its Amazon Fresh business by leveraging Whole Foods’ brick-and-mortar space and inventory.
Amazon’s Fresh subsidiary distributes natural, organic, specialty, produce, and conventional groceries as a delivery service.
In short, all that Whole Foods has to offer is delivered right to the doorstep of your home.
Whole Foods has been a key player in the organic food products sector since the 1980s.
The organic food market chain offers fresh produce, organic fruits, high-quality proteins, and other non-food products like natural soaps and shampoos.
Over the 2000s, the company grew in popularity and became one of the leading organic supermarkets in the space.
As Whole Foods announces its ambitious expansion plans under Amazon’s leadership, its ambitions continue to rise.
Jason Buechel, the company’s CEO, reported they were looking to open as many as 30 new stores per year.
But that’s not where it ends for Amazon in the organic food space. The online retailer also offers a vast selection of organic foods online through its traditional marketplace.
Analysts project growth ahead as they speculate that Amazon could double its online F&B sales globally by 2026.
Amazon’s marketplace, Amazon Fresh, and Whole Foods’ brick-and-mortar spaces give the conglomerate an edge over its competitors.
However, it’s important to keep in mind that Amazon’s business is highly diversified from web servers to space rockets and everything in between.
Therefore, while the company has strong positioning in the industry, its price and performance will be dependent on numerous other factors.
Amazon’s stock has been a strong performer overall in the tech sector and forms part of the exclusive FAANG companies—a leading group of stocks of the five most prominent tech companies in America.
The past few months have been rough for Amazon investors as the tech giant has fallen along with the broader market. But the tide could quickly change in its favor once the stock market is able to get back on its feet.
As always, we’ll be watching closely.
Beyond Meat Inc (NASDAQ: BYND)
BYND is a company that keeps showing up no matter where you look. The plant-based meat substitute company is best known for its plant protein patties.
According to the company’s website, their ingredients are simple, made from plants, and without the use of Genetically Modified Organisms (GMOs).
The United States Department of Agriculture (USDA) prohibits the use of GMOs in organic food production.
BYND has placed itself at the forefront of the plant-based food revolution by providing healthier and more sustainable alternatives to traditional meat products.
The company has secured essential partnerships with leading food distributors and big-name brands.
One of its greatest successes was securing an offering from fast-food restaurant giant McDonald’s (MCD).
The McPlant burger is a plant-based option that the restaurant chain is offering to capture a wider clientele that includes meatless consumers.
Since its IPO, the company’s stock has been fueled by volatility. Shares of BYND grew in value over four times right after the IPO, only to lose it all and nearly gain it all back in less than one year.
However, it appears investors have lost their appetite for the stock as of late.
BYND shares are now close to 92% below their January 2021 high.
The decline in value is likely fueled by a slide in sales and tensions with China—where the company is based.
But the future could be bright for the faux meat industry.
Analysts project that the plant-based meat market could grow at a CAGR of 18.8% through 2030. If these projections are accurate, BYND could largely benefit from this trend and deliver investors a generous return.
The company has also started to look better on a fundamental level. For one thing, they beat EPS expectations in the fourth quarter by almost 12%.
A breath of fresh air, considering it missed EPS the last three quarters by more than 34% each time.
Price action is also showing a significant slowdown over the past few months. Another indication that bears could be running out of steam. Thus, allowing room for the bulls to possibly take back the lead.
Sprouts Farmers Market Inc (NASDAQ: SFM)
Sprouts Farmers Market (SFM) is a grocery store chain specializing in natural and organic foods.
The organic food retailer caters to a similar crowd to that of Whole Foods. Offering perishable and non-perishable product categories.
SMF boasts one of the highest ESG scores on our list, with a rating of 16.7.
Low ratings are considered to be low risk and attractive for ESG investors. Thus, the organic food retailer could be an excellent addition to the portfolio of environmentally conscious investors.
The company has achieved a score of excellence through its partnerships with third-party ESG advisors.
By leveraging their advice, the company has been able to carry out assessments and steer the ship in the right direction.
But does a strong ESG score prove enough to make this a compelling investment that delivers healthy returns?
Regarding price action, the company’s stock is forming a long-term cup on the chart. It appears shares of the company have found a support level near the $17 mark.
Investors would be disappointed to learn that SFM shares are about the same price as their IPO in 2014. That’s close to 30% below their all-time high.
However, if shares of the company continue to curve upward, it’s possible that they might challenge their previous price peak. But a technical move would also need to be supported by fundamentals.
When it comes to earnings, the company appears to be doing well. Sprouts Farmers Market Inc. has beaten earnings expectations in the last four quarters. Boasting an EPS beat of close to 14% in the fourth quarter of 2022.
The company also has a compelling price-to-earnings (P/E) ratio of 13.85x, indicating it could be undervalued.
Another interesting fact about the retailer is that it has a high short float of more than 15%. The short interest could also help the price increase as bears attempt to cover their position.
Are Organic Food Company Stocks a Good Investment?
Organic food stocks could be an excellent investment as the trend has become increasingly popular in recent years.
The trend is primarily driven by consumers who want to make healthier life choices and are concerned about the environmental impact of traditional farming methods.
Organic products are usually farmed without pesticides and chemicals. Therefore, organic farming tends to be more sustainable and better for the land, consumers, and biodiversity.
As ESG investing becomes ever more popular organic food stocks that prioritize sustainability and ethical farming practices could pose an increase in growth.
Brands like Whole Foods, United Natural Foods (UNFI), and Sprout’s Farmers Market Inc (SMF) could be best positioned to attract ESG investors.
As pointed out by a USDA report, organic food companies could also benefit from higher profit margins.
The same report also shows that organic food and beverage product sales have grown between 5% and 26% each year since 1991.
But will the growth continue as organic stocks have already expanded their footprint nationwide?
The answer might be yes, or at least that’s what some analysts believe could be true.
A report by Grand View Research estimates that organic food sales could expand at a compound annual growth rate (CAGR) of 13% through 2030.
The expansion rate is even more impressive compared to the conventional food industry.
Overall global food sales are projected to grow at a slower compound annual growth rate of only 6.21% through 2027.
Studies show that nearly 34% of Americans buy into the trend, of which only 6% eat exclusively organic.
The data clearly shows that a large percentage of the population still doesn’t consume organic foods.
Then, it’s possible that demand could keep growing as more people convert, helping the organic market segment expand in valuation.
However, there could also be some risks for the industry as inflation is changing the food consumption habits of Americans.
Higher prices in the organic sector could affect their sales as Americans opt for cheaper conventional alternatives.
But whether consumers will opt out of organic food to cut costs is yet to be seen, and investors could be surprised by the results.
There have been reports that indicate that brand loyalty among organic food brands is high.
Now that you know more about organic stocks, you might want to add one (or more) to your portfolio.
What is the Best Organic Food Stock to Invest?
The best organic food stocks to buy now include:
- Amazon (AMZN)
- Beyond Meat (BYND)
- United Natural Foods (UNFI)
- Sprouts Farmers Market (SFM)
- SunOpta (STKL)
- Village Super Market (VLGEA)
- Conagra Brands (CAG)
- The Hain Celestial Group (HAIN)
- General Mills (GIS)
Is Plant-Based Food a Good Investment?
The plant-based food industry could be an attractive long-term investment as analysts project a compound annual growth rate of 12% through 2032. Plant-based meats are also a growing segment of the industry. The faux meat industry is forecast to grow at a CAGR of 18.8% through 2030.
Who Produces the Most Organic Food?
Several countries are leading the production of organic food. But a report shows that one country stands out from the rest, and that country is India. The Asian country boasts over 1.6 million organic food producers, more than the nine countries that follow it combined.