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Americans Fill Carts With More Organics: 5 Top Gainers
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The Organic Trade Association’s annual survey of the U.S. organic sector showed that an increasing number of Americans filled their carts with organic products last year. In fact, the organic food products market made a new record as Americans continue to buy everything from organic ice cream to organic dried beans to organic fresh juices.
Sales of organic non-food products also created a new benchmark. Thus, investing in stocks making the most of this bullishness seems judicious.
Maturing U.S. Organic Sector
The Organic Trade Association’s recent survey showed that organic sales in the United States came in at $49.4 billion in 2017, up 6.4% from the previous year. Sales of organic food products rose 6.4% to hit a record high of $45.2 billion. It’s well above the growth rate of the overall food market that nudged up 1.1%. Organic food products’ share rose in the total food market, and now accounts for 5.5% of the total food products sold in various retail chains in the United States. In fact, the organic market in the country has more than doubled in size in the last decade alone.
Laura Batcha, CEO and Executive Director of the Organic Trade Association said “demand for organic is flourishing as consumers seek out nutritious and clean food that is good for their health and for the environment.” Batcha expects the organic food market to grow at a steady pace in the near term and still be able to surpass the growth rate of the broader food market.
U.S. Organic Food vs Total Food Sales, Growth and Penetration, 2013-2017
Category
2013
2014
2015
2016
2017
Organic Food
($ million, consumer sales)
31,378
35,099
39,006
42,507
45,209
Growth (%)
12.2%
11.9%
11.1%
9%
6.4%
Total Food
($ million, consumer sales)
760,486
787,575
807,998
812,907
822,160
Growth (%)
2.7%
3.6%
2.6%
0.6%
1.1%
Organic (as % Total)
4.1%
4.5%
4.8%
5.2%
5.5%
(Source: Organic Trade Association’s 2018 Organic Industry Survey)
Fruits and vegetables topped the organic sales category. The segment recorded $16.5 billion in sales last year, up 5.3% from the previous year. The organic dried beans subsector stood out with sales up 9%, indicating an uptick in demand for plant-based and legumes products.
One of the key organic categories, dairy and eggs also saw its sales increase 0.9% to $6.5 billion, while the beverage category registered a 10.5% rise to $5.9 billion. Fresh juices was the primary growth driver in beverages, with sales climbing nearly 25% to $1.2 billion. Alteration of health trends and innovation helped the beverages segment notch double-digit growth.
Organic Non-Food Market Sees Steady Growth
The organic non-food market too posted a solid 7.4% jump in sales to $4.2 billion last year, outstripping the meager 1.9% growth in the broader non-food market. The size of the organic non-food market has doubled in the last 10 years. Organic fiber was the fastest growing sub sector, up 11% to $1.6 billion, with most of the sales coming from organic cotton. Organic dietary supplements surged 9% due to increased demand for plant-based or whole food supplements.
Batcha said that “consumers don’t want to eat just clean food, but they also are demanding transparency, clean ingredients and plant-based products in every aspect of their lives”. She added that “the non-food organic market has made great strides, but there is still a vast opportunity for more growth in this sector”.
U.S. Organic Non-Food vs Total Non-Food Sales, Growth and Penetration, 2013-2017
Category
2013
2014
2015
2016
2017
Organic Non-Food
($ million, consumer sales)
2,770
3,152
3,555
3,866
4,151
Growth (%)
12.8%
13.8%
12.8%
8.8%
7.4%
Total Non-Food
($ million, consumer sales)
433,890
443,846
456,130
459,634
468,368
Growth (%)
3.4%
2.3%
2.8%
0.8%
1.9%
Organic (as % Total)
0.64%
0.71%
0.78%
0.84%
0.89%
(Source: Organic Trade Association’s 2018 Organic Industry Survey)
Tasty Food Stocks That Are Profiting
With everyone paying attention to organic products, certain firms are well poised to play this broader shift in the organic market place. On the surface, Pinnacle Foods Inc. seems to be a processed food company. But, it also makes products including organic and light whipped butter spread that should make the most of this new trend. Fresh-foods grocer, Sprouts Farmers Market, Inc. (SFM - Free Report) too stands to gain. Sprouts has already projected double-digit revenue growth for this year and the next. Both, Pinnacle Foods and Sprouts currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Herbalife Nutrition Ltd. (HLF - Free Report) , in the meantime, has come up with weight-loss solutions, meal replacements and protein shakes that cater to consumers’ present taste. Herbalife has gained more than 50% so far this year and is one of the top performers on Wall Street. The expected growth rate for the stock, in fact, for the current year is 10.3% compared with the industry’s estimated rally of 3.7%.
In the last 60 days, one estimate moved up, while none moved lower for the current year. The Zacks Consensus Estimate for earnings rose 1.1% in the same period. If this isn’t enough, then the stock also carries a Zacks Rank #2 (Buy).
United Natural Foods, Inc. (UNFI - Free Report) is one of the biggest organic food distributors. After all, Amazon’s Whole Foods is its top client. At the same time, United Naturals serves a number of smaller organic retailers in the United States. The company’s projected growth rate for the current year is 20.6%, more than the industry’s estimated rally of 15.2%.
In the last 60 days, one estimate moved up, while none moved lower for the current year. The Zacks Consensus Estimate for earnings increased 0.6% in the same period. United Natural also carries a Zacks Rank #2.
Natural Grocers by Vitamin Cottage, Inc. (NGVC - Free Report) – a Zacks Rank #2 company – is another specialty retailer of natural and organic groceries and dietary supplements. In the last 60 days, two estimates moved up, while none moved lower for the current year. The Zacks Consensus Estimate for earnings jumped 19% in the same period.
Beer is not a health food. But craft beer sounds a bit healthier. Its sales continue to move north, whereas the overall volume of U.S. beer sales declined last year as shown in the Brewer’s Association 2017 figures. The Boston Beer Company, Inc. (SAM - Free Report) , in particular, helped create the craft beer. The company’s expected growth rate for the current year is 22.6% compared with the industry’s estimated rally of 14.5%.
In the last 60 days, three estimates moved up, while none moved lower for the current year. The Zacks Consensus Estimate for earnings increased 9.7% in the same period. If this is not enough, the stock also flaunts a Zacks Rank #1 (Strong Buy).
Non-Food Stocks Make Hay While the Sun Shines
In the non-food segment, Delta Apparel, Inc. (DLA - Free Report) saw its organic sales increase despite a tough retail landscape and cost pressure. Needless to say that the company’s top and bottom lines improved year over year in second-quarter fiscal 2018 (read more: Delta Apparel Q2 Earnings & Sales Rise Year Over Year).
Delta Apparel is not only expected to give a solid return of 12.8% in 2018, but also the Zacks Consensus Estimate for its current-year earnings moved up 11.1% in the last 60 days. During the same period, one estimate moved up, while none moved lower for the current year. Delta Apparel has a Zacks Rank #1.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Americans Fill Carts With More Organics: 5 Top Gainers
The Organic Trade Association’s annual survey of the U.S. organic sector showed that an increasing number of Americans filled their carts with organic products last year. In fact, the organic food products market made a new record as Americans continue to buy everything from organic ice cream to organic dried beans to organic fresh juices.
Sales of organic non-food products also created a new benchmark. Thus, investing in stocks making the most of this bullishness seems judicious.
Maturing U.S. Organic Sector
The Organic Trade Association’s recent survey showed that organic sales in the United States came in at $49.4 billion in 2017, up 6.4% from the previous year. Sales of organic food products rose 6.4% to hit a record high of $45.2 billion. It’s well above the growth rate of the overall food market that nudged up 1.1%. Organic food products’ share rose in the total food market, and now accounts for 5.5% of the total food products sold in various retail chains in the United States. In fact, the organic market in the country has more than doubled in size in the last decade alone.
Laura Batcha, CEO and Executive Director of the Organic Trade Association said “demand for organic is flourishing as consumers seek out nutritious and clean food that is good for their health and for the environment.” Batcha expects the organic food market to grow at a steady pace in the near term and still be able to surpass the growth rate of the broader food market.
U.S. Organic Food vs Total Food Sales, Growth and Penetration, 2013-2017
Organic Food
($ million, consumer sales)
Total Food
($ million, consumer sales)
(Source: Organic Trade Association’s 2018 Organic Industry Survey)
Fruits and vegetables topped the organic sales category. The segment recorded $16.5 billion in sales last year, up 5.3% from the previous year. The organic dried beans subsector stood out with sales up 9%, indicating an uptick in demand for plant-based and legumes products.
One of the key organic categories, dairy and eggs also saw its sales increase 0.9% to $6.5 billion, while the beverage category registered a 10.5% rise to $5.9 billion. Fresh juices was the primary growth driver in beverages, with sales climbing nearly 25% to $1.2 billion. Alteration of health trends and innovation helped the beverages segment notch double-digit growth.
Organic Non-Food Market Sees Steady Growth
The organic non-food market too posted a solid 7.4% jump in sales to $4.2 billion last year, outstripping the meager 1.9% growth in the broader non-food market. The size of the organic non-food market has doubled in the last 10 years. Organic fiber was the fastest growing sub sector, up 11% to $1.6 billion, with most of the sales coming from organic cotton. Organic dietary supplements surged 9% due to increased demand for plant-based or whole food supplements.
Batcha said that “consumers don’t want to eat just clean food, but they also are demanding transparency, clean ingredients and plant-based products in every aspect of their lives”. She added that “the non-food organic market has made great strides, but there is still a vast opportunity for more growth in this sector”.
U.S. Organic Non-Food vs Total Non-Food Sales, Growth and Penetration, 2013-2017
Organic Non-Food
($ million, consumer sales)
Total Non-Food
($ million, consumer sales)
0.89%
(Source: Organic Trade Association’s 2018 Organic Industry Survey)
Tasty Food Stocks That Are Profiting
With everyone paying attention to organic products, certain firms are well poised to play this broader shift in the organic market place. On the surface, Pinnacle Foods Inc. seems to be a processed food company. But, it also makes products including organic and light whipped butter spread that should make the most of this new trend. Fresh-foods grocer, Sprouts Farmers Market, Inc. (SFM - Free Report) too stands to gain. Sprouts has already projected double-digit revenue growth for this year and the next. Both, Pinnacle Foods and Sprouts currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Herbalife Nutrition Ltd. (HLF - Free Report) , in the meantime, has come up with weight-loss solutions, meal replacements and protein shakes that cater to consumers’ present taste. Herbalife has gained more than 50% so far this year and is one of the top performers on Wall Street. The expected growth rate for the stock, in fact, for the current year is 10.3% compared with the industry’s estimated rally of 3.7%.
In the last 60 days, one estimate moved up, while none moved lower for the current year. The Zacks Consensus Estimate for earnings rose 1.1% in the same period. If this isn’t enough, then the stock also carries a Zacks Rank #2 (Buy).
United Natural Foods, Inc. (UNFI - Free Report) is one of the biggest organic food distributors. After all, Amazon’s Whole Foods is its top client. At the same time, United Naturals serves a number of smaller organic retailers in the United States. The company’s projected growth rate for the current year is 20.6%, more than the industry’s estimated rally of 15.2%.
In the last 60 days, one estimate moved up, while none moved lower for the current year. The Zacks Consensus Estimate for earnings increased 0.6% in the same period. United Natural also carries a Zacks Rank #2.
Natural Grocers by Vitamin Cottage, Inc. (NGVC - Free Report) – a Zacks Rank #2 company – is another specialty retailer of natural and organic groceries and dietary supplements. In the last 60 days, two estimates moved up, while none moved lower for the current year. The Zacks Consensus Estimate for earnings jumped 19% in the same period.
Beer is not a health food. But craft beer sounds a bit healthier. Its sales continue to move north, whereas the overall volume of U.S. beer sales declined last year as shown in the Brewer’s Association 2017 figures. The Boston Beer Company, Inc. (SAM - Free Report) , in particular, helped create the craft beer. The company’s expected growth rate for the current year is 22.6% compared with the industry’s estimated rally of 14.5%.
In the last 60 days, three estimates moved up, while none moved lower for the current year. The Zacks Consensus Estimate for earnings increased 9.7% in the same period. If this is not enough, the stock also flaunts a Zacks Rank #1 (Strong Buy).
Non-Food Stocks Make Hay While the Sun Shines
In the non-food segment, Delta Apparel, Inc. (DLA - Free Report) saw its organic sales increase despite a tough retail landscape and cost pressure. Needless to say that the company’s top and bottom lines improved year over year in second-quarter fiscal 2018 (read more: Delta Apparel Q2 Earnings & Sales Rise Year Over Year).
Delta Apparel is not only expected to give a solid return of 12.8% in 2018, but also the Zacks Consensus Estimate for its current-year earnings moved up 11.1% in the last 60 days. During the same period, one estimate moved up, while none moved lower for the current year. Delta Apparel has a Zacks Rank #1.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>