WhiteWave Foods is Soaring: Will the Rally Continue?

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So far, 2014 has been good to WhiteWave Foods . The stock is up more than 81% in the past year, with shares trading around $35 a pop today. If you are not familiar with the name WhiteWave Foods, you probably know their products. Some of the company's top brands include Silk soymilk and almond milk, Land-o-Lakes butter, and International Delight coffee creamers. However, with the stock now trading around all time highs, many investors wonder whether there is more upside from here. Let's dig deeper to uncover potential catalysts for the stock going forward.

There's more to this stock than merely a rich valuation
Shares of WhiteWave Foods look expensive today with a price-to-earnings-growth or PEG ratio of 2.7, which is slightly above the food products industry average. The stock also trades at more than 57 times earnings, giving it one of the highest P/E ratios in the industry. Yet, the stock's rich valuation only tells part of the story. On the business front, WhiteWave Foods is making smart investments in its future. The consumer packaged foods company recently coughed up $195 million to buy dairy-free beverage and desserts maker So Delicious.

Source: WhiteWave Foods.

Not only will this acquisition help fuel earnings growth for WhiteWave going forward, but it also increases the company's market share in the fast-growing plant based beverage and non-dairy creamers category. So Delicious has grown its sales 25% year-to-date to $115 million. These results reflect a broader trend in which more consumers are opting for non-GMO plant-based foods these days. Additionally, as WhiteWave Foods chief executive Gregg Engles points out, "So Delicious is also recognized as the #1 plant-based frozen dessert brand in the United States, and it will provide WhiteWave entry into the growing, plant-based frozen dessert category."

Smart acquisitions aren't the only thing WhiteWave has going for it. The company achieved sales growth across all of its key segments in the second quarter. For the period ended June 30, WhiteWave generated double-digit organic sales growth, with net sales climbing 36% to $838 million in the quarter. The plant-based food and beverage business spiked 13%, driven by strong growth of the company's Silk branded products including a mind blowing 45% increase in sales of Silk Almond milk. WhiteWave's European sales were also up double-digits in the quarter.

Source: WhiteWave Foods.

This impressive earnings performance speaks to the strength of WhiteWave Foods growing portfolio of brands. Moreover, the company's recent purchase of So Delicious should only boost this momentum in the quarters ahead. Meanwhile, WhiteWave Foods international strategy is yet another catalyst for the stock going forward.

Big plans for the Chinese market
Earlier this year, WhiteWave announced a joint venture with China Mengniu Dairy Company to manufacture and sell a range of products in the Asian country. As one of the world's largest consumer markets, China is essential to WhiteWave's long-term growth plans. Furthermore, by joining forces with one of China's leading dairy companies, WhiteWave is setting itself up for major gains in a Chinese market with a multi-billion dollar nutritious products industry.

WhiteWave Foods and its plant-based portfolio of products are transforming from niche to mainstream today, and this should be even more evident as its Chinese ambitions play out in the year ahead. From where I sit, WhiteWave looks like a growth stock that is still in the early stages of its evolution. With international expansion in key markets like China, smart acquisitions and ongoing investments in its growing portfolio of brands, WhiteWave Foods stock should move much higher from here in the years to come.

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The article WhiteWave Foods is Soaring: Will the Rally Continue? originally appeared on Fool.com.

Tamara Rutter owns shares of WhiteWave Foods. The Motley Fool recommends WhiteWave Foods. The Motley Fool owns shares of WhiteWave Foods. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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