The customer appeal of organic and natural foods continues to swell, and so does investors' appetite for Hain Celestial Group (HAIN). The stock has climbed to 24.95, up from 17 in October. Hain, the industry leader, produces foods that are minimally processed and largely free of artificial ingredients and preservatives. Grocery products are its biggest line, accounting for 55% of sales, followed by tea products at 16% and snacks at 14%. "Healthy eating has become very much a way of life," says Robin Manners West, portfolio manager at New Mexico's State Investment Office, which owns shares. Hain has lots of room to grow, she says, because the industry's spurt is just starting. She expects the stock to reach 32 to 34 in a year. "Hain commands leading positions in 13 of the top 15 natural and organic food categories," which are among the fastest-growing in the industry, says Richard Joy of Standard & Poor's, who rates the stock a "buy." That makes Hain "an attractive acquisition target for big food companies," says Joy. He expects Hain will earn $1.10 a share in the 2006 calendar year and $1.60 in 2007, vs. just 59 cents in 2005.
Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.
By Gene G. Marcial