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Stocks to Buy Now: How to Find the Next Whole Foods

With conservative, low-beta sectors such as consumer staples driving the market higher in the first quarter, it is not surprising that select food stocks are getting in on the act, being among favorite stocks to buy in Q1.

Prized for their consistent, predictable earnings and in many cases, steadily rising dividends, food stocks usually viewed as boring by investors were first-quarter leaders.

For example, General Mills Inc. (NYSE: GIS) surged 19.3% in the first quarter. The maker of Cheerios, and other highly recognizable brands announced a 15% dividend increase in March. Rivals ConAgra Foods Inc. (NYSE: CAG) and Kraft Foods Group Inc. (Nasdaq: KRFT) are up 19% and 12.6%, respectively.

But investors who want the reliability of food stocks but are in search of more growth should look past these big-name favorites.

There is another group of stocks delivering huge gains in the industry, and that's health food stocks.

Stocks to Buy Now: Profit from the Health Food Craze

Sales growth of organic and non-organic health foods eclipsed $30 billion and outpaced sales growth for traditional food makers for the first time in 2011.

And there's still plenty of room for growth.

Market researcherPackaged Factsnow projects that U.S.retail sales of natural and organic foodsand beverages should exceed $78 billion by 2015 – up from $39 billion in 2010.

At this point, it is fair to say many investors know a little something about either Whole Foods Market Inc. (Nasdaq: WFM) or maybe even The Hain Celestial Group Inc. (Nasdaq: HAIN). The two are arguably the Apple and Google of health food stocks growth stories.

In the past five years, shares of Hain Celestial have more than doubled. Granted this is a long time to have held a stock, but Whole Foods shares have jumped nearly 2,900% since the company went public in 1992.

Again, Hain Celestial and Whole Foods are the known entities in the health foods arena. Dozens of analysts cover the companies and each has ample institutional ownership.

While that does not mean these two stocks offer no more upside, investors might want to consider other health foods names as a way of profiting from the healthy eating craze.

Let's take a look at the other options.

Join the conversation. Click here to jump to comments…

  1. fallingman | April 23, 2013

    Since when does the desire on the part of consumers to eat real food as opposed to processed crap constitute a "craze?" Think a little bit before you use derogatory language to marginalize a rather large segment of the population.

    I guess if it's a craze that makes me crazy. Better to be a disease nut I guess.

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