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5 Reasons Why You Should Invest in United Natural (UNFI)
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Most product categories across the consumer staples space have been rising since the past few months. In fact, amid tepid job data figures, Brexit aftershocks, Federal Reserve’s reluctance to hike rates and other global growth issues, we believe investing in consumer staples stocks is safe because of their defensive nature.
The sector fared well in the first quarter of 2016. Lower gas prices and increasing consumer confidence did the trick for these stocks. In fact, it should be kept in mind that the consumer staples sector has the potential to face the headwinds coming from global market turmoil and continued volatility in the equity market.
Let us focus on one consumer staples stock – United Natural Foods, Inc. (UNFI - Free Report) – which can be a good choice for investors, amid global issues.
Low Beta Stock: United Natural has a beta of 0.96. A stock with less than 1 beta suggests that the price movement of the stock is not highly correlated with the market. Since they are less volatile than the market, they are safer bets at the moment.
Rank and Estimates: All the estimates for United Natural – a Zacks Rank #1 (Strong Buy) stock – have moved north for fiscal 2016 and fiscal 2017 over the past 30 days.
Value Score: United Natural carries a VGM score of A. Here “V” stands for Value, “G” for Growth and “M” for Momentum and the score is the weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select winners.
However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM score.
Our Value Style Score condenses all valuation metrics into one actionable score that helps investors steer clear of ‘value traps’ and identify stocks that are truly trading at a discount. Our research shows that stocks with Style Scores of ‘A’ or ‘B’ when combined with a Zacks Rank #1 or 2 (Buy) offer the best upside potential.
Quarterly Results and Outlook: United Natural posted better-than-expected earnings in the third quarter of fiscal 2016 and raised its outlook for fiscal 2016. Earnings of 76 cents per share beat the Zacks Consensus Estimate of 66 cents by 15.2% but declined 8.4% from the prior-year quarter earnings of 83 cents due to lower gross and operating income margins. Net sales of $2.13 billion lagged the Zacks Consensus Estimate of $2.17 billion, but increased 0.8% from the prior-year quarter. Acquisitions of Global Organic/Specialty Source, Inc. ("Global Organic") in March and Nor-Cal Produce, Inc. ("Nor-Cal") in April contributed about $18.1 million to net sales.
United Natural raised its fiscal 2016 sales and earnings guidance, based on the company's performance, recent acquisitions and the positive outlook for the remainder of fiscal 2016.
Strategic Acquisitions: The company has been carrying out various acquisitions over the years to grow its distribution network, customer base and boost long-term growth. In May 2016, United Natural completed the acquisition of Haddon House Food Products, which will provide the company with greater operating scale and resources to further develop its product and service offerings.
The acquisition of Nor-Cal Produce, Inc., a distributor of conventional and organic produce and other fresh products in Northern California, will provide United Natural a national presence and would help expand its existing produce operations. Prior to that, the company, through its wholly owned subsidiary Albert's Organics, Inc., completed the acquisition of certain assets of Global Organic, which is a premier distributor of organic fruits, vegetables, juices, milk, eggs, nuts, and coffee in the Southeast.
In the past too, the company has benefited from acquisitions. The acquisition of Tony’s Fine Foods (in Jul 2014), a specialty distributor of perishable food products, has helped the company to expand both its high-growth perishable product offerings and its distribution footprint in the western region of the United States. The buyout of Trudeau Foods in Sep 2013 helped the company to expand its products in the markets of Minnesota, North Dakota, Wisconsin and Michigan’s Upper Peninsula.
The acquisition of Canadian food distribution assets of SunOpta Inc. in Jun 2010 made the company the largest distributor of natural, organic and specialty foods, including kosher foods in Canada.
The company will continue to focus on further opportunities in the upcoming quarters to enhance its position within the natural and organic industry in the U.S. and Canada and to increase its market share in the specialty products industry.
Other Key Picks
Investors may also have a look at these other well-ranked food stocks such as The J.M. Smucker Co. (SJM - Free Report) , Post Holdings, Inc. (POST - Free Report) and Sysco Corp. (SYY - Free Report) . While Smucker and Post Holdings sport a Zacks Rank #1, Sysco carries a Zacks Rank #2.
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5 Reasons Why You Should Invest in United Natural (UNFI)
Most product categories across the consumer staples space have been rising since the past few months. In fact, amid tepid job data figures, Brexit aftershocks, Federal Reserve’s reluctance to hike rates and other global growth issues, we believe investing in consumer staples stocks is safe because of their defensive nature.
The sector fared well in the first quarter of 2016. Lower gas prices and increasing consumer confidence did the trick for these stocks. In fact, it should be kept in mind that the consumer staples sector has the potential to face the headwinds coming from global market turmoil and continued volatility in the equity market.
Let us focus on one consumer staples stock – United Natural Foods, Inc. (UNFI - Free Report) – which can be a good choice for investors, amid global issues.
UTD NATURAL FDS Price and Consensus
UTD NATURAL FDS Price and Consensus | UTD NATURAL FDS Quote
Why Pick United Natural?
Low Beta Stock: United Natural has a beta of 0.96. A stock with less than 1 beta suggests that the price movement of the stock is not highly correlated with the market. Since they are less volatile than the market, they are safer bets at the moment.
Rank and Estimates: All the estimates for United Natural – a Zacks Rank #1 (Strong Buy) stock – have moved north for fiscal 2016 and fiscal 2017 over the past 30 days.
Value Score: United Natural carries a VGM score of A. Here “V” stands for Value, “G” for Growth and “M” for Momentum and the score is the weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select winners.
However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM score.
Our Value Style Score condenses all valuation metrics into one actionable score that helps investors steer clear of ‘value traps’ and identify stocks that are truly trading at a discount. Our research shows that stocks with Style Scores of ‘A’ or ‘B’ when combined with a Zacks Rank #1 or 2 (Buy) offer the best upside potential.
Quarterly Results and Outlook: United Natural posted better-than-expected earnings in the third quarter of fiscal 2016 and raised its outlook for fiscal 2016. Earnings of 76 cents per share beat the Zacks Consensus Estimate of 66 cents by 15.2% but declined 8.4% from the prior-year quarter earnings of 83 cents due to lower gross and operating income margins. Net sales of $2.13 billion lagged the Zacks Consensus Estimate of $2.17 billion, but increased 0.8% from the prior-year quarter. Acquisitions of Global Organic/Specialty Source, Inc. ("Global Organic") in March and Nor-Cal Produce, Inc. ("Nor-Cal") in April contributed about $18.1 million to net sales.
United Natural raised its fiscal 2016 sales and earnings guidance, based on the company's performance, recent acquisitions and the positive outlook for the remainder of fiscal 2016.
Strategic Acquisitions: The company has been carrying out various acquisitions over the years to grow its distribution network, customer base and boost long-term growth. In May 2016, United Natural completed the acquisition of Haddon House Food Products, which will provide the company with greater operating scale and resources to further develop its product and service offerings.
The acquisition of Nor-Cal Produce, Inc., a distributor of conventional and organic produce and other fresh products in Northern California, will provide United Natural a national presence and would help expand its existing produce operations. Prior to that, the company, through its wholly owned subsidiary Albert's Organics, Inc., completed the acquisition of certain assets of Global Organic, which is a premier distributor of organic fruits, vegetables, juices, milk, eggs, nuts, and coffee in the Southeast.
In the past too, the company has benefited from acquisitions. The acquisition of Tony’s Fine Foods (in Jul 2014), a specialty distributor of perishable food products, has helped the company to expand both its high-growth perishable product offerings and its distribution footprint in the western region of the United States. The buyout of Trudeau Foods in Sep 2013 helped the company to expand its products in the markets of Minnesota, North Dakota, Wisconsin and Michigan’s Upper Peninsula.
The acquisition of Canadian food distribution assets of SunOpta Inc. in Jun 2010 made the company the largest distributor of natural, organic and specialty foods, including kosher foods in Canada.
The company will continue to focus on further opportunities in the upcoming quarters to enhance its position within the natural and organic industry in the U.S. and Canada and to increase its market share in the specialty products industry.
Other Key Picks
Investors may also have a look at these other well-ranked food stocks such as The J.M. Smucker Co. (SJM - Free Report) , Post Holdings, Inc. (POST - Free Report) and Sysco Corp. (SYY - Free Report) . While Smucker and Post Holdings sport a Zacks Rank #1, Sysco carries a Zacks Rank #2.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>