Could Whole Foods meltdown drive gains elsewhere?
Shares of Whole Foods tumbled more than 20% after the company reported earnings. Are results telling you to give up on organic and natural food stocks?
Jim Cramer doesn't think so.
Although he realizes when it cut its 2014 same-store sales and earnings forecast for the third time, he also thinks developments bode well for another company.
And that company is Hain.
Cramer realizes that may seem counterintuitive at first. After all Hain makes a wide range of organic and natural brands that include Celestial Seasonings, Earth's Best, Terr, Garden of Eatin', The Greek Gods Yogurt.
If Whole Foods is facing challenges, doesn't it stand to reason that Hain is also challenged?
Not in this case. Cramer says if you dig down into the Whole Foods earnings report, you'll find that the weakness was due to more competition from other supermarkets.
He takes that to mean the trend of healthy eating has really gained a foothold in the American psyche and, therefore, more stores are looking to grab a piece of the organic pie.
As a result, "more stores are carrying natural, wholesome merchandise than ever before," he said. And it's being made by Hain!
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Cramer believes confirm the bullish outlook.
"The company reported a 2-cent earnings beat off of an 86-cent basis, with record revenues that rose 22% year over year. Plus, management raised their full-year sales and earnings guidance," Cramer said.
"Just because Whole Foods had a huge meltdown yesterday, that doesn't mean you should give up on the organic and natural food stocks," Cramer said. In fact, it's just the opposite.
Weakness in Whole Foods may well be a sign that healthy eating is growing substantially more popular. And, if that's the case, Hain should profit. "But, it's not a buy for the quarter. It's an investment for the long-term."
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