On Friday, WhiteWave Foods Co (NYSE:WWAV) stock continues to do what it’s been doing a lot since its 2013 initial public offering: beat the hell out of the market.
WhiteWave earnings in the first-quarter came in at 22 cents per share, 2 cents better than expected, while also boosting full-year earnings-per-share guidance. Wall Street was again thrilled, and WWAV stock surged 6% higher in morning trading.
It’s nothing new for WWAV stock, which was carved out of Dean Foods Co (NYSE:DF) and spun off as its own company a few years back. Boy was that a good call — WhiteWave stock is up more than 190% since then, topping the performance of the S&P 500 by upwards of 140 percentage points.
Dean Foods stock, for its part, is merely breakeven when adjusted for splits.
An Organic Niche
WhiteWave, an organic and natural foods producer, spun off from Dean Foods as a clear shift in consumer taste buds was sweeping the nation. The recent glowing success of companies like Whole Foods Market, Inc. (NASDAQ:WFM) have proven beyond a shadow of a doubt that people were growing sick and tired of processed foods and artificial flavoring.
And people are willing to pay a premium for healthy food, too.
That’s the proverbial bread and butter of WWAV, which has brands like Silk, Horizon, Earthbound Farm and Land O Lakes in its portfolio. Silk’s almond and soy milks helped drive 20% sales growth in the Americas Plant-based Foods and Beverages unit in the first quarter.
WhiteWave and organic food peer Hain Celestial Group Inc (NASDAQ:HAIN) are starting to pose a big problem for “Big Food,” the traditional, ho-hum packaged food companies of yesteryear. Think Campbell Soup Company (NYSE:CPB), Kellogg Company (NYSE:K), ConAgra Foods Inc (NYSE:CAG) and the like.
Campbell Soup CEO Denise Morrison even admitted back in February that CPB was battling a “mounting distrust of so-called Big-Food, the large food companies and legacy brands.”
But for every yin there is a yang, and the tears of self-pity Big Food shed are being eagerly lapped up and used as rocket fuel for WhiteWave and Hain Celestial, both of which have walloped the broader market in the last year. WhiteWave now expects EPS of $1.10 to $1.14 in 2015, up from its previous $1.08 to $1.12 guidance.
This trend away from processed and traditional brands of yesteryear in favor of healthier products with less-tarnished names is so secular and so strong that I think WWAV, at a market cap of $8.2 billion, could become a blue-chip stock one day.
Of course, WhiteWave could always be snapped up in an M&A deal by one of the Big Food behemoths, too, which is why I also think WWAV is one of the 10 best M&A targets in the stock market today.
Either way, the WhiteWave earnings report on Friday only reaffirms that if you’re looking for some truly organic growth, you’ve found it in WWAV.
As of this writing John Divine did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.
