Whole Foods (Nasdaq: WFM) Is the Envy of Peers, but Is It a "Buy"?

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The organic foods business is a $60 billion global industry, and no other grocery chain has profited from this boom as much as Whole Foods Market Inc. (Nasdaq: WFM).

Whole Foods is leading the charge of supplying organic, natural, and locally grown foods to the health-conscious eater. Founded in 1980, it now has a count of 355 stores in 40 states and 3 countries.

WFM stock has shown astronomic growth as well, with shares up nearly 500% in five years.

The growth will continue. According to the U.S. Food and Drug Administration, organic food consumption has gone up 9% per year over the last five years. Future growth rates could be greater than 8% annually.

That's why competition is increasing. A slew of competitors are taking a page out of Whole Foods' book and expanding rapidly.

Can Whole Foods' industry dominance – and WFM's stock tear – continue?

Let's dig in and find out.

Whole Foods Clear Advantage

Whole Foods is doing something that may seem impossible – it is thriving in troubled economic times. Profits rose 20% in the most recently reported quarter, with earnings per share of 38 cents and revenue rising more than 12%.

Whole Foods sales of $11.7 billion in 2012 account for only 2% of the U.S. supermarket industry. To capitalize on this still-growing industry, Whole Foods has laid out plans to increase its store count to 1,000 over the long term.

One advantage Whole Foods has over the competition: the shopping experience. It's not one that other stores have duplicated.

Loyal Whole Foods patrons love the trained and educated personnel that range from experienced butchers, fishmongers, dietitians, and cheese connoisseurs to the sandwich makers and checkout clerks.

That's why same-store sales – although slightly slowing in the most recent quarter – have been increasing.

But other stores want to steal away the Whole Foods consumer…

Join the conversation. Click here to jump to comments…

  1. Bob | September 23, 2013

    i know it said stock butt…since i hold large positions in the 3…I would like your analytical opinion on pot,slv and slw… thank u in advance

    • Jason | September 24, 2013

      I have to agree with Bob, especially given the turmoil recently in the Potash market.

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