Whole Foods: A Fresh Stock in Rotten Times

In a sour economy for consumer-facing companies, grocer Whole Foods Market (NYS: WFM) has managed to keep its business fresh.

Third-quarter net income increased 35%, to $88.5 million, or $0.50 per share. Whole Foods' total sales increased 11%, to $2.4 billion. Same-store sales surged 8.4%, an admirable increase in this day and age, and a heartening indicator of growing market share.

In addition, Whole Foods beat analysts' estimates for earnings of $0.47 per share. The organic grocer also increased its earnings expectations for the year to between $1.91 and $1.92 per share, compared to analysts' expectations for $1.90 per share.

Whole Foods' quarter looks particularly fresh in relation to many of its rivals' wilting results. Shares of conventional rival Safeway (NYS: SWY) plunged last week, after it reported lackluster quarterly comps growth of just 0.5% and declining margins. SUPERVALU's (NYS: SVU) same-store sales dropped 3.9% in its latest quarter. Megaretailer Wal-Mart (NYS: WMT) has struggled to kickstart U.S. sales for about two years now.

That said, the grocery-related stocks above may look a whole lot cheaper than Whole Foods shares, which trade at 31 times forward earnings. Many investors may think that's simply too rich a premium for a grocery stock.

Don't make a mistake and miss the big picture here. If you're looking for real growth, Whole Foods remains a great stock idea for the long term. This grocer is stepping up its store openings, not shutting down sagging storefronts. It just paid off its debt. And it makes efforts to create a healthier world for kids, which in turn makes a healthier environment for its business.

Whole Foods' quarterly tidings further suggest that it can continue innovating and nurture growth despite general economic adversity. In tough times, it's worthwhile to pay up for the most nimble market players. Whole Foods just proved it's more than up to the challenge.

At the time thisarticle was published The Motley Fool owns shares of Wal-Mart Stores, SUPERVALU, and Whole Foods Market.Motley Fool newsletter services have recommended buying shares of Wal-Mart Stores and Whole Foods Market; buying calls in SUPERVALU; and creating a diagonal call position in Wal-Mart Stores. Try any of our Foolish newsletter services free for 30 days.Alyce Lomax owns shares of Whole Foods Market. 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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