3 Reasons WhiteWave Foods Stock Will Outperform in 2015

WhiteWave Foods is enjoying a record year in 2014, with shares up a whopping 76%. Investors pushed shares of the packaged foods and beverages company higher recently after WhiteWave delivered record sales growth for its second quarter. With the stock now trading near all-time highs of around $36 a pop, many investors fear they missed the rally. Not to worry -- here are three catalysts that should drive WhiteWave Foods stock higher in the year ahead.

Source: WhiteWave Foods.

International expansion in China
WhiteWave Foods has been heavily investing in the Chinese market throughout much of the past two years, and investors should begin to see the fruits of its labors in 2015. Instead of going it alone in this massive market, WhiteWave teamed up with one of China's largest dairy companies, Mengniu Dairy. As part of the deal, WhiteWave will own a 49% stake in the joint venture, and Mengniu a 51% stake. This creates a significant opportunity for the company in the years ahead, as China is the world's largest consumer market with over 1.3 billion consumers and a rapidly growing middle class.

WhiteWave has made many investments to support this joint venture, including the purchase of a production facility where it plans to begin manufacturing its products for the Chinese market as soon as next year. WhiteWave poured roughly $47.3 million into the project during the first two quarters of 2014. These strategic investments will likely lower WhiteWave Foods fiscal 2014 earnings by around $0.05 per share. However, that is a small price to pay given the long-term sales potential this creates for WhiteWave in China's multi-billion dollar nutritious products channel.

Production and sales in China are set to begin in late 2014, according to a recent SEC filing. This should be a boon for the company's international sales in 2015 as Chinese consumers become more familiar with WhiteWave's products over the year ahead.

Smart acquisitions and brand building
In addition to expanding its footprint in key overseas markets, the company is also growing its portfolio of leading brands. At the end of last year, WhiteWave jumped into the fast-growing organic produce channel by acquiring Earthbound Farm for $600 million. Earthbound is the largest organic produce brand in North America -- generating net sales in excess of $500 million in 2013.

This should pad the company's pockets in the year ahead, as more consumers are buying organic produce today. Moreover, the organic packaged salad category boasts a five-year compound annual growth rate of 15% according to data from Credit Suisse.

Source: WhiteWave Foods.

More recently, WhiteWave scooped up dairy-free beverage and desserts maker So Delicious for a cool $195 million. While it will take the remainder of the year to integrate So Delicious into its business, this deal should fuel earnings growth for WhiteWave Foods in 2015 as it increases the company's market share in the fast-growing plant-based beverage and non-dairy creamers category. As WhiteWave Foods chief executive Gregg Engles points out, "So Delicious is 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."

These acquisitions should pay off for WhiteWave Foods in 2015, with its Earthbound, Silk, International Delight, and Horizon Organic products each on pace to becoming billion dollar brands.

Favorable industry dynamics
WhiteWave Foods is still in the early stages of its growth story. Yet one of the most important catalysts for the stock going forward is that it operates in an increasingly lucrative industry. Growth in the organic category continues to outpace that of the overall food and beverage industry today. Meanwhile, the dairy sector alone was estimated to be a $51 billion market in the U.S. last year. These represent two key areas in which WhiteWave's products are uniquely positioned.

From its beverages platform, which includes coffee creamers and iced coffee products under the International Delight and Land O'Lakes brands as well as its premium dairy products and organic produce, WhiteWave is at the forefront of evolving consumer trends. This trend toward organic and plant-based foods should act as a tailwind for WhiteWave in the quarters ahead.

The big takeaway here for investors is that WhiteWave Foods has a long runway of growth still ahead of it. It seems the company's international expansion, recent acquisitions and market position in fast-growing categories like organic and plant-based products should only drive the stock higher in 2015.

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The article 3 Reasons WhiteWave Foods Stock Will Outperform in 2015 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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