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Bull of the Day: United Natural Foods (UNFI)

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There are several risks for stocks on the horizon these days. Between the Fed, lackluster growth, and the possibility of a ‘Brexit’, investors have plenty on their plates this summer.

That is why it might be a great time to look to the more defensive sectors of the market, such as consumer staples, as a way to profit in this uncertain time. After all, consumer staples have been among the two best performing sectors of the S&P 500 over the past one year time frame suggesting they have been great places to put cash with the uncertain market climate.

While a broad play on the sector is a solid idea, investors can also look to some of the top ranked stocks in this space for exposure. One that definitely stands out as an impressive choice right now is United Natural Foods (UNFI - Free Report) .

UNFI in Focus

United Natural Foods sells organic, natural, and specialty foods across the U.S. and Canada, while the company also has a variety of options in more specialized segments like private label, bulk, vitamins, and sports nutrition just to name a few. But while the organic and natural food segment is certainly a growth area, the recent history has been a difficult time period for UNFI investors. 2015 was a very sluggish year, but the company appears to have righted the ship in the past few months.

In fact, the company is beating out the S&P 500 from a YTD look, and things are looking especially promising following the company’s latest earnings report. Given this, now could definitely be the time to buy this food company on the dip, particularly if we look to how analysts have been reacting in light of the company’s recent earnings report.

Recent Earnings & Outlook

In UNFI’s most recent earnings report, the company thoroughly crushed estimates, beating expectations by about 15%. But the outlook was the real key for this stock, as management raised sales guidance and boosted EPS projections as well, thanks to the strong consumer demand for the company’s key products.

And with these improved projections from management, analysts were pretty much racing to raise their estimates for UNFI stock. We have seen eight estimates go higher for the current quarter in just the past week, while we have seen ten estimates move higher for the full year in the past seven day time frame too.

These increases have helped to boost the consensus estimate by about 5% for both the current quarter and the current year, setting up a nice trend for UNFI stock heading into the summer. No wonder shares of UNFI currently have a Zacks Rank #1 (Strong Buy) and why we are looking for outperformance from this company in the months ahead.

Bottom Line

UNFI is a company on the move in a quickly growing industry, and with the latest earnings for this firm, investors have to like the near term possibilities. This is especially true when you consider that the industry rank here is in the top 20% overall, and that UNFI also has a VGM score of ‘A’, putting it into the top 20% from a fundamental look as well.

So if you are looking for a great consumer play to survive what looks to be a very volatile and difficult summer, make sure to give United Natural Foods a closer inspection as this could be a prime pick for investors in this uncertain market climate.

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